Quebec, Nova Scotia and Ontario have the least small business friendly tax regimes.
TORONTO — Ontario and Quebec, Canada’s most populous provinces, continue to lag behind the others when it comes to business-friendly tax systems for small companies, according to a Canadian Federation of Independent Business (CFIB) report.
The second edition of the Small Business Provincial Tax Index puts Ontario (8), Nova Scotia (9) and Québec (10) at the bottom, while the top three spots go to Alberta, Saskatchewan and New Brunswick.
The report examines 53 indicators in five major areas of tax policy: premiums and payroll taxes; sales and excise taxes; corporate income taxes; personal income taxes; and property taxes.
CFIB notes Alberta and Quebec, best and worst by wide margins, were also at the top and bottom of the index in the 2009 ranking.
Showing the greatest improvements from 2009 are Newfoundland and Labrador (from sixth to fourth) and PEI (from seventh to fifth). BC dropped from fourth to seventh position.
Top ranked Alberta has no employee or employer payroll taxes; no provincial sales tax; and a low personal income tax rate with a high personal exemption. By comparison, Quebec’s small businesses pay high payroll taxes and there’s a high number of corporate and personal income tax credits to go along with high corporate and personal income tax rates.
Alberta is best in premiums and payroll tax, personal income tax, and sales and excise tax. Newfoundland and Labrador has the highest rank in the property tax subindex, and BC scores the best in the corporate income tax. At the other end, Quebec earns the lowest position for premiums and payroll tax, corporate income tax, and personal income tax.
Ontario scores the poorest in the property tax subindex, and BC scores the worst in the sales and excise tax.
Within manufacturing’s workers’ compensation indicators, Alberta scores best with a rate of $1.16 per $100 of assessed payroll. PEI scores lowest with a rate of $4.19. Ontario is in the middle at $2.61.
“Small business owners consistently tell us that complicated, costly tax systems are the biggest obstacle to growth,” said CFIB president Dan Kelly. “Yet as we celebrate small business month, some governments are contemplating new taxes for infrastructure, prescription drugs or recycling and many finance ministers are pushing for a hike to the grand-daddy of payroll taxes – CPP/QPP premiums.”
Here is a list of each province according to current rank, its index score and rank in 2009:
Alberta, 8.53 (1)
Saskatchewan, 7.01 (3)
New Brunswick, 6.98 (2)
NL, 6.17 (6)
PEI, 5.90 (7)
Manitoba, 5.67 (5)
BC, 5.65 (4)
Ontario, 5.59 (9)
NS, 5.22 (8)
Quebec, 3.97 (10)
Click here for a copy of the report.