which collect about 27 and 33 percent of GDP in government revenues,
respectively.
Progressive Taxes
Before discussing details about the Canadian tax system, we examine the
concept of progressivity of taxes.
When the government taxes one income group in society more heavily
than it taxes another, it influences the distribution of income. The effect
of taxes on the distribution of income can be summarized in terms of
progressivity. A progressive tax takes a larger percentage of income
from high-income people than it does from low-income people. A
proportional tax takes amounts of money from people in direct
proportion to their incomes—for example, every individual might pay 10
percent of his or her income in taxes. A regressive tax takes a larger
percentage of income from low-income people than it does from high-
income people.
Note that the progressivity or regressivity of a tax is expressed in terms of
shares of income rather than absolute dollar amounts. Thus, a tax that
collects $1000 from each individual clearly collects the same dollar
amount from everybody, though it collects a higher share of income from
low-income people than from higher-income people. A tax of this type is
therefore a regressive tax. It is often called a lump-sum tax, one that is the
same at all levels of income.