Quebec and Ontario have the least small business-friendly provincial tax systems in the country, according to a new study by the Canadian Federation of Independent Business (CFIB).
CFIB’s Small Business Provincial Tax Index is the second of three unique tax projects undertaken by CFIB in recent months. This study examines how the provinces stack up by examining 65 indicators in five major areas of tax policy: premiums and payroll taxes; corporate income taxes; property and capital taxes; personal income taxes, and sales and excise taxes. As of December 31st, 2008, the provinces received the following scores on a scale of 0 to 10, where 0 is worst and 10 is best:
| Alberta | 7.98 |
| New Brunswick | 6.32 |
| Saskatchewan | 6.30 |
| British Columbia | 5.72 |
| Manitoba | 5.60 |
| Newfoundland and Labrador | 5.45 |
| Prince Edward Island | 5.24 |
| Nova Scotia | 5.08 |
| Ontario | 4.10 |
| Quebec | 4.02 |
“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,” said CFIB President Catherine Swift. “It is no secret that a province’s tax system can help attract or repel investment, and these provinces in particular are doing a poor job of nurturing small business growth,” Swift noted. She added that the cost, complexity and number of taxes business owners face are a barrier to local growth and stability.
Swift didn’t leave the higher ranking provinces off the hook. “All provincial tax systems have room for improvement because most provinces barely make a passing grade,” said Swift. She pointed out that those provinces which score better on CFIB’s Small Business Provincial Tax Index levy lower rates of tax and apply broad-based incentives that are simple and accessible.
“It is important that provincial policy makers understand the need to foster a mutually beneficial relationship with local business owners,” said Swift. To that end, tax relief measures contained in the Ontario Budget (reducing personal and corporate taxes) are a step in the right direction.
She concluded that small firms not only invest in their local communities, but also provide employment and add to the tax base to help pay for government programs. “When provincial governments support small business, they’re indirectly supporting themselves.”
To view the full report,
In search of tax excellence: Where provinces rank in creating a tax climate for small- and medium-business success.
