The Politics of Consumption Tax Reform
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Playing with Fiscal Fire: The Politics of Consumption Tax Reform by Matthew Lesch A thesis submitted in conformity with the requirements for the degree of Doctor of Philosophy Department of Political Science University of Toronto © Copyright by Matthew Lesch 2018 Playing with Fiscal Fire: The Politics of Consumption Tax Reform Matthew Lesch Doctor of Philosophy Political Science University of Toronto Abstract 2018 Drawing on the case of consumption tax reform, this dissertation investigates the varying capacity of governments to enact and institutionalize ―general-interest reforms‖ (Patashnik 2003). The study advances a two-stage theory of policy reform. The first part explains why some governments, in spite of the political risks, decide to pursue general-interest reforms. In this first stage, two variants of policy learning—rational learning and emulation—are proposed to explain policy uptake. The second stage of the theory builds on policy feedback scholarship (Pierson 1993;Mettler and SoRelle 2014), claiming that the durability of a reform hinges on policy design. It proposes that governments can prompt various policy feedback effects through policy design and communications. Such efforts can shape the political incentives and perceptions of interest groups, opposition parties and voters at key junctures in the policy process. The study illustrates the analytic value of this approach through two distinct but complementary empirical strategies. First, through comparative case analysis using mainly qualitative techniques of elite interviews and document analysis, it compares the varying experiences of two Canadian provincial governments— Ontario and British Columbia (BC)—with value-added tax (VAT) reform. While each government chose to pursue VAT reform in the late 2000s, only in the case of Ontario was it successfully implemented while the BC government was forced to reverse its policy decision. Second, through a series of survey experiments, the study tests whether issue framing and policy design can shape mass receptivity to various tax reforms (e.g., carbon, sales and income taxes). The findings from the case studies as well as the survey experiments provide novel insights into the importance of policy design. The study holds important implications for our broader understanding of the mechanisms underpinning policy change and stability. ii Acknowledgments Simply put, this thesis would not have been possible without the support and efforts of several people. First, I would like to thank my supervisor, Linda White. Since day one, Linda has been my strongest advocate. Her insights and support have been instrumental to the completion of this thesis. During the writing process, Linda was a steady source of encouragement, keeping my spirits up when I needed it most. While always willing to help, she also afforded me the space to develop my own identity. She is one of the brightest and most generous scholars that I have ever had the privilege to work with. I‘d also like to thank my other committee members, Peter Loewen and Graham White. I am deeply indebted to Peter Loewen for being a constant source of knowledge, advice, and encouragement. Peter has one of the sharpest minds that I have ever come across. More than anyone else, Peter has taught me how to approach the study of politics in a much more rigorous and scientific fashion. I have learnt so much from him over the years. His work ethic and unstinting commitment to advancing social science research should be a model for all of us. Graham White provided thoughtful suggestions and honest criticism throughout the research and writing process. Graham showed keen enthusiasm for this project early on and offered invaluable advice throughout. His willingness to ask tough questions was particularly instructive in honing the structure and clarity of my argument. This thesis is a much stronger piece of work because of his generous efforts. I‘d also very much like to thank my extended committee, Carolyn Tuohy and Alan Jacobs, each who made the defense a highly engaging intellectual exercise. Carolyn‘s wealth of knowledge about public policy was particularly helpful in clarifying the theoretical contributions of my argument. In his role as external examiner, Alan went well beyond the call of duty, providing a remarkably comprehensive and highly systematic examination of the thesis. His comments provoked the most engaging discussion that I have ever had about my research. He has my sincere gratitude for this. Several other faculty members at the University of Toronto and elsewhere offered insights that helped sharpen my thinking along the way. Specifically, I‘d like to thank Sara Hughes, Peter Graefe, Grace Skogstad, Kent Weaver, Michael Donnelly, Kathy Harrison, Ryan Hurl, Gabe Eidelman, Doug Macdonald, Monica Prasad, Jamie Druckman, John Bullock, Allan Tupper, Paul Quirk, Cameron Anderson, Stefan Renckens, Steven Bernstein, and Matt Hoffmann. Thank you as well to the administrative staff in the Department, especially to Carolynn Branton and Sari Sherman. I‘d like to express my gratitude to the interview participants in this study, and most especially to Sean Mullin, Steve Orsini, Kevin Milligan, and Bill Tieleman. I‘d also like to acknowledge iii funding that I received from Fulbright Canada, the Ontario Graduate Scholarship, Sustainable Prosperity, and the Canadian Studies Graduate Student Network. Thank you to members of the ―Brain Trust,‖ Beth Evans, Carmen Ho, Marion Laurence, and Hamish van der Ven. My research and life have been greatly enriched by your wisdom and friendship. Special shout-out goes to Heather Millar, who has been exceptionally patient and supportive colleague, co-author, co-instructor, and friend. We will get published together one day, I promise. To Luke Melchiorre, Steve Trochimchuk, and Abe Singer, thank you for teaching me that the grad school is about so much more than research and teaching. I can‘t imagine I would have been able to get through this program without the countless hours that we spent watching sports and debating politics. I‘d also like to thank Andrew McDougall, Abouzar Nasirzadeh, Zain Asaf, Josh Gordon, Milena Pandy, Eve Bourgeoise, Alex Pelletier, Jerry Sabin, Carey Doberstein, Paul Thomas, Evan Rosevear, Lindsay Mahon, Lincoln Rathnam, Kiran Banerjee, Adrienne Davidson, Joey Rice, Lior Sheffer, Lama Mourad, Sophie Borwein, Matt Hamilton, Julia Bognar, and Jacqueline Peterson. Thank you for making grad school such an enjoyable experience. To Steve Lesch and Dana Granofsky, two of my most honest and sharpest critics, thank you for always keeping me on my toes. Convincing both of you that I am always right will remain my life‘s work. Thank you so much to the staff at the GoodLife Fitness (College St), the Green Grind, the Tempered Press, Opera Bobs, and the Emmett Ray. A shout-out to my noted accomplices: Shane Isaac, Lindsey Colquhoun, John Sullivan, Stacey Grimshaw, Borys Chylinski, and Heather Modesto. These are the real unsung heroes of this thesis. To my parents, Joan Montgomery and Terry Lesch, thank you so much for the unwavering support you‘ve both provided. From a very early age, my Mom instilled the importance of hard work, strategic thinking, and civic responsibility. My Dad taught me that forming and cultivating social relationships are one of the most important parts of life. These are invaluable lessons that I carry with me everyday. The seeds of this intellectual journey were planted several years ago by two fine gentlemen. Glenn Levine, my teacher at STEP, was the first person to recognize that I had something meaningful to say but that laziness and other distractions were inhibiting my potential. Thank you for recognizing this, and for convincing me to ―do better.‖ Stefan Samuel at Brother Andre Catholic High School was the first person to take my intellectual capability seriously. At the ripe age of 17, he leveraged my interest in politics, introducing me to the works of Charles Taylor, Alasdair MacIntyre and Nietzsche. Thank you for choosing to become an educator; your impact on my intellectual development has been immeasurable. iv Finally, to my nephews Malcolm and Camden, and my niece Elise, I dedicate this thesis to you. v Table of Contents Acknowledgments.......................................................................................................................iii List of Tables.............................................................................................................................. vii List of Figures.............................................................................................................................viii List of Appendices.........................................................................................................................ix Chapter 1: Introduction ................................................................................................................1 Chapter 2: The Politics of Taxation: Situating the Study .......................................................26 Chapter 3: A Theory of Consumption Tax Reform .................................................................48 Chapter 4: Policy Learning and Tax Policymaking: The Case of the Harmonized Sales Tax (HST) in Ontario ..........................................................................................................................98 Chapter 5: Policy Emulation and Tax Policymaking: The Case of the Harmonized Sales Tax (HST) in British Columbia (BC) .......................................................................................127