As tax filing deadline looms, The Conference Board of Canada measures personal and business tax burdens
OTTAWA, May 2, 2016 /CNW/ - British Columbia has one of the highest provincial tax burdens for businesses, but one of the lowest for individuals, according to The Conference Board of Canada's new report, Benchmarking Provincial Tax Burdens.
- British Columbia ranks behind only Saskatchewan and Alberta for the lowest provincial personal tax burden among the provinces.
- B.C.'s net tax burden on businesses is higher than all provinces except for Ontario and Quebec.
- Reverting to a provincial sales tax in 2013 likely increased the tax burden on businesses in British Columbia.
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).
"British Columbia has the lowest provincial implicit personal income tax rate for all income groups below $100,000, which makes it one of the most competitive provinces in terms of personal taxation," said Julie Adès, Senior Economist.
"On the other hand, B.C.'s tax burden on businesses is higher than all provinces except for Ontario and Quebec. And the reversion from a value-added sales tax, such as the HST, back to a conventional retail sales tax has likely increased the burden on businesses."
This analysis is based on data from 2011, which were the most recent data available for gross output in the business sector at the time this report was completed. At that time, British Columbia had one of the lowest sales tax burdens on businesses as a share of gross output in the business sector, due to its implementation of a value-added harmonized sales tax (HST). Economic analysis indicates provinces with value-added sales tax impose less of a burden on businesses. However, British Columbia reverted to its former provincial sales tax in 2013. Provincial sales taxes which can be applied to inputs many times before a final sale raise business costs and may discourage business investment.
In addition, British Columbia raised its corporate income tax rate from 10 to 11 per cent in 2013, although it is not the only province to have increased corporate taxation in recent years.
In terms of personal taxation, British Columbia ranks third in terms of the lowest-tax burden, behind only Saskatchewan and Alberta. All three provinces have relatively low provincial implicit personal income tax rates. British Columbia has the lowest implicit personal tax rate in four income ranges ($0 to $29,000; $30,000 to $49,999; $50,000 to $69,999; and $70,000 to $99,999).
Although property taxes in B.C. add more to the tax burden than in most other provinces, B.C. retains its spot as one of the lowest-taxed jurisdictions for individuals.
This report does not assess the goods and services financed by governments through tax revenues.
Business taxation in the analysis includes: provincial corporate income taxes, social security contributions, payroll taxes, and 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 the provinces on June 1, 2016 at 11 AM PT.
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.
SOURCE Conference Board of Canada
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