– 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 through research that is nonpartisan, evidence-based and subject to definitive expert review.
CANADA – Calgary is increasingly lagging behind Saskatoon, which has the most competitive overall business tax environment among the largest cities in each Canadian province, according to a new C.D. Howe Institute report. In “Business Tax Burdens in Canada’s Major Cities: The 2016 Report Card,” authors Adam Found and Peter Tomlinson rate the largest cities in each province for their business tax competitiveness using a comprehensive measurement tool.
“Businesses look closely at the total expected tax burden for a prospective investment,” commented Found. “Cities should closely monitor their tax competiveness. Heavy business tax burdens reduce potential returns, driving investment away to other jurisdictions.”
The authors point out that Canadian governments’ current measurement of the overall tax burden on business investment does not include business property taxes or land transfer taxes. This is a large oversight: the authors find that these taxes represent about two-thirds of the total tax burden on investment in Canada.
Building off their 2013-15 work, the authors quantify the 2016 tax burden on business investment for the largest city in each province, focusing on—from the federal to municipal level—corporate income taxes, retail sales taxes, land transfer taxes and business property taxes.
The authors again find the highest tax burdens to be in Saint John, Charlottetown, Montreal, Halifax, and Winnipeg. As for the most competitive business tax environments, Saskatoon and Calgary still lead the way. Vancouver, Toronto, and St. John’s remain close to the group average.
Saint John, Calgary, and St. John’s are the only cities that have seen their tax burdens increase in recent years, mainly because of increases in provincial corporate income and property taxes.
Tomlinson concluded: “It is time that governments included business property taxes in their tax burden estimates, which would prompt a more balanced and informed examination of the level and mix of business taxation they impose.”
