18.1 Taxation in Canada LO 1
Although the main purpose of the tax system is to raise revenue, tax
policy is potentially a powerful device for income redistribution
because the progressivity of different kinds of taxes varies greatly.
The most important taxes in Canada are the personal income tax, the
corporate income tax, excise and sales taxes (including the
nationwide GST), and property taxes.
The progressivity of a tax is determined by how the average tax rate
(taxes paid divided by income) changes as income changes. If the
average tax rate rises as income rises, the tax is progressive. If the
average tax rate falls as income rises, the tax is regressive.