As tax filing deadline looms, The Conference Board of Canada measures personal and business tax burdens
OTTAWA, May 2, 2016 /CNW/ - Ontario has the second highest provincial net tax burden on businesses among the provinces, according to a new Conference Board of Canada report, Benchmarking Provincial Tax Burdens.
- Ontario has the fifth lowest overall provincial personal tax burden, behind the four western provinces.
- Only Quebec has a higher provincial net business tax burden than Ontario for the four years analyzed from 2008 to 2011.
- Ontario has a relatively low provincial tax burden on individuals with incomes of up to $100,000, but earners of more than $100,000 pay more compared to many of their peers in other provinces.
This report compares the provincial tax burden on businesses and individuals among provinces based on the calculation of average provincial tax burden ratios. The analysis is based on data through 2011 for business taxation and 2012 for personal taxation (which were the most recent data available at the time this research was completed).
In terms of business taxation, Ontario has a comparatively high provincial corporate income tax burden as a share of gross output in the business sector. The inclusion of social security contributions, payroll taxes and sales taxes in the analysis adds to the tax burden on Ontario businesses in comparison to those business in other provinces. Only Quebec had a higher provincial net business tax burden than Ontario in 2011.
Turning to personal taxation, Ontario has the fifth-lowest overall provincial tax burden among the provinces. Each of the four western provinces has lower personal taxation burdens than Ontario.
"Ontario's overall ranking is based on a relatively modest provincial personal income tax burden for tax payers earning less than $100,000, but a relatively high burden on those making more than that," said Julie Adès, Senior Economist.
The Conference Board's analysis assessed implicit personal income tax rates in five ranges—$0 to $29,000; $30,000 to $49,999; $50,000 to $69,999; $70,000 to $99,999; and $100,000 or more. In terms of the ratio of provincial personal income tax to total personal income, Ontario has the third-lowest ratio in three of four lower income ranges (and fourth-lowest in the lowest income range of $0 to $29,999). In the highest-income range (more than $100,000), Ontario has the fifth-highest ratio.
This analysis does not take into account changes to taxation in the province since 2012. For instance, Ontario introduced a new tax rate of 12.16 per cent in 2014 for those earning between $150,000 and $220,000.
This report does not assess the goods and services financed by governments through tax revenues.
Business taxation includes: provincial corporate income taxes, social security contributions, payroll taxes, property taxes, and provincial sales taxes as well as the provincial segments of the HST.
Personal taxation includes: provincial personal income taxes, social security contributions paid by employees, property taxes, and provincial sales taxes as well as the provincial segments of the HST.
Join Julie Adès and Matthew Stewart for a live webinar to discuss the findings for all provinces on June 1, 2016 at 2 PM ET.
The report was produced for the Centre for Tax Analysis, Fiscal Incentives and Competitiveness (TAFIC). Launched in 2014, TAFIC provides Canadian business leaders and policy-makers with credible, leading-edge quantitative research on all aspects of the Canadian system of taxation and fiscal incentives. Using sophisticated econometric tools to measure the impact of proposed reforms on the Canadian economy, TAFIC publishes evidence-based and accessible reports on key issues related to taxation and fiscal incentives.
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