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Last updated: August 20 2019
Tax Reform Needed: The Numbers Tell the Story
Beth Graddon, Evelyn Jacks & Walter Harder
The ideals of a top-notch tax system include fairness, equity, simplicity, compliance and ultimately affordability. Are Canadians – across all provinces – experiencing these ideals? It’s a question that is often contemplated by university graduates in deciding where they want to build their careers, as well as executives, business owners and retirees, who consider moving to lower taxed jurisdictions as part of their year end tax planning. Advisors may be called upon to help make those decisions.
We have pulled together a inter-provincial comparison of tax competitiveness including the level of tax free zones (Basic Personal Amounts) and provincial taxes on median household incomes. The numbers tell an interesting story:
|
Province |
Year |
Provincial Median Household Total Incomes** |
Provincial Tax Rate Lowest Income Bracket |
Provincial Basic Personal Amount |
Provincial Taxes on Median Income |
% of income paid in provincial taxes |
|
Newfoundland & Labrador |
2019 |
$70,816 |
8.7% |
$9,414 |
$ 4,140 |
5.85% |
|
2018 |
$69,021 |
8.7% |
$9,247 |
$ 4,029 |
5.84% |
|
|
2017 |
$67,272 |
8.7% |
$8,978 |
$ 3,936 |
5.85% |
|
|
|
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|
Prince Edward Island |
2019 |
$64,385 |
9.8% |
$9,160 |
$ 4,141 |
6.43% |
|
2018 |
$62,753 |
9.8% |
$9,160 |
$ 3,982 |
6.35% |
|
|
2017 |
$61,163 |
9.8% |
$8,160 |
$ 4,034 |
6.60% |
|
|
|
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|
Nova Scotia |
2019 |
$63,965 |
8.79% |
$8,481 |
$ 3,626 |
5.67% |
|
2018 |
$62,344 |
8.79% |
$8,481 |
$ 3,390 |
5.44% |
|
|
2017 |
$60,764 |
8.79% |
$8,481 |
$ 3,627 |
5.97% |
|
|
|
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|
New Brunswick |
2019 |
$62,473 |
9.68% |
$10,682 |
$ 3,689 |
5.90% |
|
2018 |
$60,890 |
9.68% |
$10,043 |
$ 3,594 |
5.90% |
|
|
2017 |
$59,347 |
9.68% |
$9,856 |
$ 3,485 |
5.87% |
|
|
Quebec |
2019 |
$62,973 |
15% |
$15,269 |
$ 5,797 |
9.21% |
|
2018 |
$61,377 |
15% |
$15,012 |
$ 5,641 |
9.19% |
|
|
2017 |
$59,822 |
15% |
$11,635 |
$ 5,491 |
9.18% |
|
|
|
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|
Ontario |
2019 |
$78,200 |
5.05% |
$10, 582 |
$ 3,533 |
4.52% |
|
2018 |
$76,218 |
5.05% |
$10,354 |
$ 3,419 |
4.49% |
|
|
2017 |
$74,287 |
5.05% |
$10,171 |
$ 3,232 |
4.35% |
|
|
|
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|
Manitoba |
2019 |
$71,737 |
10.8% |
$9,626 |
$ 5,310 |
7.40% |
|
2018 |
$69,919 |
10.8% |
$9,382 |
$ 5,184 |
7.41% |
|
|
2017 |
$68,147 |
10.8% |
$9,271 |
$ 5,012 |
7.35% |
|
|
|
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|
Saskatchewan |
2019 |
$79,384.40 |
10.50% |
$16,065 |
$ 4,439 |
5.59% |
|
2018 |
$77,372.71 |
10.50% |
$16,065 |
$ 4,250 |
5.49% |
|
|
2017 |
$75,412 |
10.75% |
$16,065 |
$ 4,157 |
5.51% |
|
|
|
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|
Alberta |
2019 |
$98,778 |
10% |
$19,369 |
$ 5,376 |
5.44% |
|
2018 |
$96,275 |
10% |
$18,915 |
$ 5,243 |
5.45% |
|
|
2017 |
$93,835 |
10% |
$18,690 |
$ 5,063 |
5.40% |
|
|
|
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|
British Columbia |
2019 |
$73,682 |
5.06% |
$10,682 |
$ 2,415 |
3.28% |
|
2018 |
$71,815 |
5.06% |
$10,412 |
$ 2,357 |
3.28% |
|
|
2017 |
$69,995 |
5.06% |
$10,208 |
$ 2,293 |
3.28% |
|
|
|
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|
Yukon |
2019 |
$88,973 |
6.40% |
$12,069 |
$ 3,633 |
4.08% |
|
2018 |
$86,719 |
6.40% |
$11,809 |
$ 3,541 |
4.08% |
|
|
2017 |
$84,521 |
6.40% |
$11,635 |
$ 3,436 |
4.06% |
|
|
|
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|
Northwest Territories |
2019 |
$123,887 |
5.9% |
$14, 481 |
$ 6,151 |
4.97% |
|
2018 |
$120,748 |
5.9% |
$14,492 |
$ 5,987 |
4.96% |
|
|
2017 |
$117,688 |
5.9% |
$11,635 |
$ 5,791 |
4.92% |
|
|
|
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|
Nunavut |
2019 |
$99,416 |
4% |
$13,618 |
$ 2,893 |
2.91% |
|
2018 |
$96,896 |
4% |
$13,325 |
$ 2,807 |
2.90% |
|
|
2017 |
$94,441 |
4% |
$13,128 |
$ 2,697 |
2.86% |
Compiled by Knowledge Bureau, all rights reserved. Source: **Median Household Income for 2017 per 2017 report from Statistics Canada; 2018 and 2019 based on indexing of 2017 per increases in average industrial wage 2018 over 2017.
When we compare numbers, there appears to be significant variance in inter-provincial tax equity.
The most tax-efficient provinces are Ontario, British Columbia and Nunavut, while the worst include Quebec, Manitoba and PEI. What does this tell us?
Our take: This inter-provincial differential is a barrier to Canadian economic growth as a whole – we would likely prefer to work with one another not compete again each other especially at a time when global trade wars put pressure on various regional markets.
For these reasons, perhaps it’s the right time for a comprehensive look at our taxing regimes with a significant and meaningful tax reform that positions Canada for growth in a new economy. We invite your views.
Additional educational resources: Help clients keep more of their hard-earned money in their pockets by implementing tax-efficient strategies. Become a DFA-Tax Services Specialist™ .
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