October 29, 2014 – Saint John, Charlottetown and Montreal have the highest tax burdens on new business amongst major Canadian cities, according to a new C.D. Howe Institute report. In “The 2014 C.D. Howe Institute Business Tax Burden Ranking,” authors Adam Found, Benjamin Dachis and Peter Tomlinson conduct groundbreaking research that includes business property taxes and land transfer taxes in measuring the tax bite that can drive away or attract new business investment.
“Current government estimates don’t take into account either provincial and municipal business property taxes or land transfer taxes,” remarked Found. “In our estimate, we find that business property taxes and land transfer taxes together represent about two-thirds of the total tax burden on investment in Canada, a large share for governments to continue to ignore.”
Using their more complete measure—which for the first time includes land transfer taxes—the authors find that Saint John, Charlottetown, and Montreal have the highest total tax rates. Calgary and Saskatoon lead the pack with the most competitive all-inclusive taxes.
The authors recommend that the Federal Department of Finance—which provides the provinces with tax burden estimates—include business property taxes, both provincial and municipal, in its interprovincial comparison of tax burdens.
Tomlinson concludes: “Despite years of concerted provincial and federal efforts to reduce the tax cost of investment, such as by lowering corporate income taxes, governments need to address a gap in their tax burden measure. Our hope is that a more accurate measure of business tax burdens will prompt a closer examination of their potential detrimental impact on business investment.”
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada's trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada's most influential think tank.
Click here for the full report.
Adam Found is an Assistant Professor, Trent University, and a Fellow-in-Residence, C.D. Howe Institute. Benjamin Dachis is a Senior Policy Analyst, also with the Institute. Peter Tomlinson is a Sessional Lecturer, University of Toronto.
For more information contact: Benjamin Dachis at 416-865-1904 Ext. 9997 or at kmurphy@cdhowe.org.