PEI tax system middle-of-the-pack; lots of room for improvement

Charlottetown, October 23, 2013 – Prince Edward Island ranks in the middle of the pack when it comes to small business-friendly tax systems, but there are significant areas for improvement, according to an updated report by the Canadian Federation of Independent Business (CFIB).

“When we talk to small business owners, the number one concern facing their business is the total burden of taxes they face. Some taxation is necessary to fund important government programs and infrastructure, but we also need our tax system to allow room for businesses to compete and grow,” said Erin McGrath-Gaudet, CFIB’s director of provincial affairs for PEI.

Ranking Provincial Tax Systems in Canada: CFIB’s 2013 Small Business Provincial Tax Index, examines elements of provincial tax systems from the perspective of small-and medium-sized business owners. The 2013 index encompasses 53 indicators in five major areas of the tax system—premiums and payroll tax; sales and excise tax; corporate income tax; personal income tax; and property tax.

The provinces received the following scores on a scale of 0 to 10, where 0 is worst and 10 is best:    

Province2013 Rank2013 Index Score2009 Rank
Alberta18.531
Saskatchewan27.013
New Brunswick36.982
Newfoundland and Labrador46.176
Prince Edward Island55.907
Manitoba65.675
British Columbia75.654
Ontario85.509
Nova Scotia95.228
Quebec103.9710

 

PEI ranks well in both payroll taxes and property taxes since the province does not levy a payroll tax and property taxes are low relative to many other jurisdictions.  When it comes to personal income tax, however, the province ranks second worst in the country.

“Islanders pay high personal income tax rates, and we start paying at a lower level of income than other Canadians. This is only getting worse because, unlike most provinces, our basic personal amount (the amount Islanders can earn before paying tax) and income tax brackets aren’t increased with inflation every year. This means a hidden tax hike every year,” explained McGrath-Gaudet.

Corporate income taxes are also a concern with PEI scoring in the bottom three. This score will drop further given the province’s small business tax rate increase took place mid-year, and so was prorated in this edition of the report.

The national rankings placed Alberta, Saskatchewan and New Brunswick in the top three spots while Ontario, Nova Scotia, and Quebec were in the bottom three positions.

Read the full report: Ranking Provincial Tax Systems in Canada: CFIB’s 2013 Small Business Provincial Tax Index.

To arrange an interview with Erin McGrath-Gaudet, please call 902-620-4914 or email erin.mcgrath-gaudet@cfib.ca

CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region.

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