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Thanx very much for this most informative post.

Why is it 'hard for governments to raise revenue from capital-intensive industries'? Haven't governments just chosen to tax capital income at low rates?

While tax payers are in principle mobile, taxable capital assets such as land and pipelines are not mobile. Governments could even regulate more the movement of money, tho capitalist governments are most unlikely to do so. But at least they could tax the transfer of money.

While taxpayers are currently free to move jurisdictions, how likely are they to do so in Canada? Unfortunately I did not keep the reference, but I thought that high taxing USA states do not have low proportions of highly taxed taxpayers. That is, the high taxing states of Wisconsin, New York and Michigan, for example, have not lost high taxpaying tax payers to Tennessee, Nevada and Wyoming.

Gavin - thanks for your kind words, and for your careful reading - you've zeroed in on what's probably the most speculative aspect of this entire post.

There's a general consensus among economists that there are limits to how much it is possible to tax capital, because it is highly mobile, so if one jurisdiction tries to tax capital the capital will just move elsewhere. But does this really apply to resource-based industries such as oil or forestry? After all, since the oil is in Alberta, the oil production kind of has to be in Alberta.

What's not in doubt, however, is that capital income *is* taxed at a much lower rate than labour income in Canada, and that a greater percentage of provincial GDP comes from "gross operating surplus" i.e. capital income in Alberta than in most other provinces - see https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3610022101. So whether one believes that the lower taxation of capital income is a necessity or a choice, there's no doubt that the capital income as a % of GDP affects a province's revenues (if not necessarily their revenue raising capacity).

Gavin - on interprovincial mobility, the classic paper is Milligan and Smart http://irpp.org/wp-content/uploads/2016/01/aots5-milligan-smart.pdf - there seems to be some amount of interprovincial movement in response to tax rates.

Thanx very much for referring me to a most informative chapter.

Thanks a lot for sharing this informative write up. Those facts are very important for them who wish to know more about Canada and analyze it.
Before reading the article, I never knew about those facts besides the highly globalized Canadian economy and its modern culture. I feel more amazed after knowing about Canadian federal governments equalization payments transfer policy to provincial governments which helps to generate more tax revenue of ‘have not province’. So, rural based province governments also can offer advanced services to their citizens.
I thought, Canadian federal Government’s huge participation in Social protection, Health, education, science and technology is great reflections of the government transparent policy and civil liberties. For which Canadians lived quality life with economic and social freedom.
Surely, Canadian economy is small open economy. But, it has become one the world’s largest economics despite the US’ economy’s huge impacts on it. In recent century Canadian manufacturing, mining and service sectors transformed a lot which is a good example for other developing countries.

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