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Public Finance In Canada 6th Edition By Rosen Chapter 1-21 INSTRUCTOR SOLUTION MANUAL

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Instructor Solution Manual For Public Finance in Canada, 6ce Rosen Chapter 1-21With Appendix Chapter 1 1. Canada’s system of government is decentralized in several ways. Most notably, especially relative to other federal countries, is the high share of subnational government expenditures as a share of total general government expenditures. In addition, responsibility over core areas of public services — including healthcare, education, social services, and so on — are the jurisdiction of provincial governments. Finally, except for only certain taxation sources (such as customs import duties), provincial governments have access to all the major sources of taxation, including income and consumption taxes. The historical reason for this decentralized system was the compromised required during early Confederation negotiations between British North American colonies. Leaving areas that were of local concern remained with provincial governments allowed diverse regions to adopt different policies. 2. a. This will increase the impact of government on the economy, as such a regulation will affect business spending decisions, labour force participation decisions, and more. It will not affect standard measures of the size of government since the expenditures will be done by private employers rather than the government. b. This will increase the impact of government on the economy, for reasons detailed in part a. But, unlike a requirement for private employers to provide daycare services, this will increase standard measures of the size of government. Such daycare subsidies will increase measured government expenditures. c. This will increase the impact of government on the economy, also for reasons detailed in part a. In addition, directly running daycare centres will also increase standard measures of the size of government since purchases of goods and services required to run these centres will count as government expenditures. d. This may or may not affect the impact of government on the economy since it is an intergovernmental grant and therefore doesn’t mechanically affect total general government revenue or expenditures. It will affect standard measures of the size of government by shrinking the federal government’s expenditures. Depending on the measure, it will also shrink provincial government revenues (though not own-source revenues, unless provinces respond by raising taxes).

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