As tax filing deadline looms, The Conference Board of Canada measures personal and business tax burdens
OTTAWA, May 2, 2016 /CNW/ - Saskatchewan has the lowest provincial net business tax burden among the provinces and the second-lowest provincial tax burden on individuals, according to a new Conference Board of Canada report, Benchmarking Provincial Tax Burdens.
- Saskatchewan businesses benefit from low non-residential property taxes and the absence of a payroll tax.
- Saskatchewan's business tax competitiveness is diminished by its conventional retail sales tax.
- Saskatchewan is among the provinces with the lowest provincial personal tax burden ratios.
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).
"Saskatchewan has the most competitive tax regime for businesses in the country, thanks to the absence of a payroll tax and low property taxes," said Julie Adès, Senior Economist.
The absence of a provincial payroll tax in Saskatchewan and a low property tax burden benefit taxpayers in the province. However, Saskatchewan's business tax competitiveness is diminished by its conventional retail sales tax.
In contrast to a value-added tax, conventional retail sales taxes can be applied to inputs many times before a final sale, depending on how often they change hands throughout the production process. This type of tax raises business costs and can discourage business investment.
Subtracting provincial subsidies from the total tax burden benefits Saskatchewan, which had one of the highest ratios of subsidies to gross output in the business sector in 2011.
Saskatchewan is among the provinces with the lowest provincial personal tax burden ratios. Including property taxes in the analysis improves Saskatchewan's overall ranking due to its small property tax burden as a share of personal income, relative to the other provinces. Saskatchewan also has the lowest sales tax burden on individuals, except for Alberta (which has no sales tax).
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 12 noon CST.
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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