Rising taxes on highly skilled, educated hurt competitiveness

Fraser Institute study says combined federal/provincial rates second highest in G7.

March 17, 2016   by PLANT STAFF

FrasertaxratesVANCOUVER — Rising federal and provincial personal income tax rates on highly skilled, educated workers are hurting Canada’s economic competitiveness, concludes a study by the Fraser Institute.

The policy think-tank’s study, Canada’s Rising Personal Tax Rates and Falling Tax Competitiveness finds the top combined federal and provincial tax rate, which is 53.5% (using Ontario’s rate) is sixth highest among 34 industrialized countries. It’s second highest among G7 countries, behind France (based on 2014

Canada’s Liberal government has introduced a new income-tax bracket, increasing the top federal tax rate to 33% from 29%. This increase adds to recent top rate increases in Ontario, Alberta and other provinces.

Nova Scotia has the highest combined rate at 54%, followed by Ontario (53.5%) and Quebec (53.3%). Currently, six of 10 provinces have a top combined rate above 50%.

“A highly skilled worker in Ontario can now lose more than 50 cents of every additional dollar they earn in labour income – hardly an attractive environment for highly skilled workers and entrepreneurs,” said Ben Eisen, co-author and associate director of provincial prosperity studies at the Fraser Institute.

BC and New Brunswick, have started to reduce their top rate to counteract the effect on their tax competitiveness.

The study also notes that Canada’s top tax rates often apply to lower levels of income than is the case in other countries, which further erodes the country’s tax competitiveness.

“In comparisons at multiple income levels, Canada’s personal income tax rates are decidedly uncompetitive compared to those in the US, putting Canada at a real disadvantage in attracting and retaining skilled and mobile workers,” said Charles Lammam, director of fiscal studies at the Fraser Institute and study co-author.

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1 Comment » for Rising taxes on highly skilled, educated hurt competitiveness
  1. Randy says:

    I can’t see our present PM having the intelligence to understand anything about tax advantage. In his world the budget balances its self.
    What this report doesn’t touch on is the added cost of carbon taxing of which there are none South of the Canadian boarder. Under this Liberal government expect the cost of Health care to rise dramatically as they try to attain doctors from leaving for a more prosperous living. Yes history is about to repeat its self. Under the last federal government Canada suffered significantly to brain drain as a result of over taxation. Apparently Liberals don’t understand the basics of math. Then again if you for example take the 7 Liberals charged with corruption in Quebec, these thieves did have some math skills. Those skills were designed to rip off the tax payer. Not far from the same tree is our selfie PM. He used to complain about PM Harper and his photo ops yet the present PM has done anything in office other than spend time in photo ops. Too busy to look after the economy because it will balance its self.

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