Mope, Gloat or Move: How Tax Compares by Province (Personal and Corporate)

I got something now to think about.

I'll work all day but not to pay it out.

--- Pete Townshend, Keep on Working

Tax. Tax. Tax. Like the weather, something we talk about but can't do much about. 

How do taxes compare from one province to another? We can find out from timely new report entitled In Search of Tax Excellence: Where Provinces Rank in Creating a Tax Climate for Small- and Medium-Business Success.   This research comes from the Canadian Federation of Independent Business (CFIB).

Smaller businesses use about half the country's workforce to produce about half the GDP. They face specific tax worries, worth understanding.

The full report runs 51 pages packs in many details and contains many references for further reading. The analysis considers 65 indicators encompassing the five key areas of tax

1. premiums and payroll tax
   
2. corporate income tax
   
3. property and capital tax
   
4. personal income tax
   
5. sales and excise tax
   

We'll look at high level results for businesses and individuals. 

Gloat: The Best Province

I'd rather be here than any other place.

--- Pete Townshend, Keep on Working

The best province for smaller businesses is Alberta. That's probably no surprise. You can enlarge the chart below by clicking on it. 

Mope: the worst provinces, Ontario and Quebec, came as a surprise.

"It is alarming that the two biggest provinces, which make up 60 per cent of the total economy, are the weakest links in the provincial tax chain."
--- Catherine Swift, CFIB President

Move: I'm not ready to return to Alberta where I lived from ages two to five. Or to New Brunswick or Saskatchewan. But I'm disappointed as an Ontario resident.

Personal Income Tax

Let's look at how much income tax we pay, provincial and federal combined. In the heat map, green means the lowest tax. British Columbia and Alberta have the lowest taxes, depending on the income. Quebec is at the other extreme. 

Corporate Income Tax
Alberta and Manitoba have the lowest corporate tax, depending on the level of income. The worst provinces are Ontario and Quebec. 

We can't do much about tax levels but our governments can. In tax worries for smaller businesses, you'll see they have been adding jobs --- unlike larger companies. Where would tax savings go? Smaller businesses say they would invest in new equipment, pay down debt, increase employee wages, hire more employees and train employees better. Wouldn't that help the economy?

Links

• In Search of Tax Excellence (CFIB, April 2009)
• Tax Worries for Small Business Owners in Canada
• The Problem of "Trapped" Retained Earnings
• Secret 7: The Best Tax Sheltering in Canada
• The Four Steps in Wealth Management

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