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Discussion C - OPTIONS FOR LONG TERM FINANCIAL HEALTH
Option 1: Shifting Taxes Away From Income & Towards Consumption
The Government of Yukon could consider a broad reform that shifts taxes away from income and productivity and towards consumption. Primarily, this would result from the introduction of a territorial sales tax and re-distributing this revenue through lowering personal and business tax.
Visitors to Yukon would contribute a substantial share of the HST revenue, perhaps in excess of 25 cents of each dollar collected, and therefore Yukoners overall would pay less tax. This will improve the efficiency of Yukon’s economy, provide funds to enlarge the cost-of-living credit recommended under the carbon tax plan, dampen the volatility of government revenue, lower its reliance on mining sector activity, improve the predictability of future government revenue, enhance the incentive to work, to save, and to invest, and better extract value from visitors to the Yukon.
Option 2: A Savings Fund
The Government of Yukon could establish a savings fund that would receive deposits in years where tax revenues come in above a set threshold and could withdraw from the fund in years where revenues come in below that threshold. This could dampen volatility of government revenue due to unexpected swings in mining sector activity.
What do you think?
What pros, opportunities and benefits are associated with these options?
What cons, challenges and limitations are associated with these options?