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Manitoba Has Relatively Low Provincial Personal Tax Burden Compared to Other Provinces

Ottawa, May 2, 2016 - Manitobans pay one of the lower provincial personal tax burdens in Canada, but businesses would likely benefit from a change in the provincial sales tax system to a harmonized sales tax (HST), according to a new Conference Board of Canada report, Benchmarking Provincial Tax Burdens.

As tax filing deadline looms, The Conference Board of Canada measures personal and business tax burdens

Ottawa, May 2, 2016 - Manitobans pay one of the lower provincial personal tax burdens in Canada, but businesses would likely benefit from a change in the provincial sales tax system to a harmonized sales tax (HST), according to a new Conference Board of Canada report, Benchmarking Provincial Tax Burdens.

Highlights

  • Only Manitoba's western neighbours have lower provincial personal tax burdens. 
  • Manitoba's competitiveness on business taxation is weakened because of the design of the provincial sales tax system and the existence of a payroll tax.
  • Social security contributions, property taxes and sales taxes burdens improve Manitoba's overall ranking on personal taxation relative to the other provinces. 
  • Provincial Tax Burden

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 report was completed).   

"Manitoba has among the highest average personal income tax rates, but the province's tax competitiveness improves when social security contributions, property taxes and sales taxes are included in the analysis," said Julie Adès, Senior Economist. "As a result, only Alberta, Saskatchewan and British Columbia have lower personal tax burdens than Manitobans."

In terms of the provincial tax burden on businesses, Manitoba ranks in the middle of the pack among the provinces. Compared to most of its provincial peers, Manitoba has low corporate income taxes as a share of gross output in the business sector. 

"Some of that advantage to businesses is lost, however, because Manitoba has a conventional retail sales tax system rather than a value-added tax, such as a HST," said Adès. 

Provinces that have implemented a value-added sales tax—such as the HST—have more competitive business sales tax burdens than provinces such as Manitoba. A conventional retail sales tax can be applied many times to business before a final sale. This type of tax raises business costs and can discourage business investment.

Manitoba is also one of only four provinces with payroll taxes. However, it provides comparatively high subsidies to businesses, which has the effect of lowering the overall tax burden on business in the province. 

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, 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 all provinces on June 1, 2016 at 1 PM CT.

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.  


For more information contact

Corporate Communications
613-526-3280
corpcomm@conferenceboard.ca


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