Tax burden lowest in Alberta, Saskatchewan, Conference Board of Canada report says
Study ranks Quebec as the province with highest personal and business taxes
Corporations and individual taxpayers in Alberta and Saskatchewan are getting off easy compared to most other provinces, according to a report from the Conference Board of Canada.
Benchmarking Provincial Tax Burdens looked at taxation systems across Canada and analyzed how the various setups either support or work against economic growth.
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The report was published by the board's Centre for Tax Analysis, Fiscal Incentives and Competitiveness.
It found Alberta and Saskatchewan were the only provinces that have both the lowest personal tax and the lowest business tax burdens.
"The tax burden is a key factor affecting both the cost of living and the cost of doing business," says the report, which is based on figures from Statistics Canada and the Canada Revenue Agency.
The report relies on data through 2011 for personal taxes and 2012 for business taxes.
Last year, the Alberta government increased its corporate income tax by two per cent, and switched from a flat to a progressive rate for personal taxes.
However, University of Calgary economist Trevor Tombe said its findings are likely still accurate.
"Overall, the report's pretty clear that the tax burden in Alberta compared to other provinces is much lower," Tombe said.
"And even the changes that we've seen over the last couple of years, that's not going to change that general conclusion. So taxes in Alberta are below average."
New Brunswick and Newfoundland and Labrador were also found to be among the provinces with the lowest net business taxes.
British Columbia and Ontario join Alberta and Saskatchewan on the list of provinces with the lowest personal tax ratios.
Taxes in Quebec highest
"Quebec remains the province with the highest tax burden on individuals as a share of household income, followed by the Atlantic provinces," the report said.
Quebec was also found to have the highest business tax burden each year from 2008 to 2011.
The report found that the four provinces with payroll taxes — Quebec, Ontario, Newfoundland and Labrador and Manitoba — were dragged down in the rankings on business tax burden.
The authors also concluded that tax burdens are higher in provinces with conventional sales taxes than those with value-added taxes, such as a harmonized federal-provincial tax.
"Whereas businesses only pay value-added sales taxes once, retail sales taxes can be applied to product inputs many times before the final sale. This form of tax raises business costs and discourages business investment," the report said.
The report singled out Manitoba, Saskatchewan and Prince Edward Island. But it noted P.E.I. now has a harmonized sales tax, while British Columbia has since stopped harmonizing its sales tax with the federal one.