Thursday, 26 July 2012
CFIB on Manitoba's "oppressive small business taxes"
|Manitoba's ZERO PERCENT small business tax rate.|
Constructed by the Analyst based on figures from
Now, one anonymous commenter countered with this:
Nice try on the corporate tax rates. It would paint a clearer picture if you included ALL required rates and remittances. The small business tax rate elimination is minor when compared against payroll tax and paid up capital tax. When you factor in these charges, Manitoba becomes uncompetitive really, really fast.
The commenter failed to provide a list of all relevant remittances, state the various rates of other government-induced costs in Manitoba, or provide any figures. If someone has constructed a graph showing the effective tax burden on small businesses in this province, then I'll gladly post it in an upcoming post after checking all the facts. Please sent your submissions by email to firstname.lastname@example.org.
Now, the commenter included the corporation capital tax, but that's been eliminated for all corporations except crown and financial corporations for a good year and a half. What are some of the analogous neighbouring districts that are attracting businesses away from Manitoba?
Some small-c conservative bloggers in this province claim Saskatchewan. The entire economic boom in our neighbour to the west, they keep saying, is thanks mostly to supply side tax changes that Manitoba could use to grow its economy. But the Canadian Federation of Independent Business - the lobbyists who assert that they represent the interests of small business - claim that Saskatchewan needs to follow Manitoba's lead to remain competitive.
Something special is happening for entrepreneurs in Manitoba. On December 1, Manitoba will become the first province in Canada to have a zero per cent small business tax rate. The government of Saskatchewan should follow suit.
The province of Saskatchewan cannot ignore the fact that we are home to the highest small business tax rate in Western Canada with Manitoba eliminating its small business tax rate on December 1 and British Columbia's plan to eliminate its small business tax rate on April 1, 2012.
To keep Saskatchewan competitive, CFIB recommends the upcoming 2011-12 provincal budget include a multi-year plan to eliminate Saskatchewan's small business corporate income tax rate.
("Manitoba small business tax rate falls to zero - Saskatchewan should follow". Canadian Federation of Independent Business)
Now, there's two ways to take this. Either Manitoba's small business tax reductions are so significant they actually threaten the competitiveness of Saskatchewan or CFIB is just using scare tactics in anti-tax propaganda directed at Saskatchewan policymakers. In a larger CFIB press release, it's stated that small businesses still pay a "host of taxes and contribute to the functioning of the government", so it looks like they're trying to spin this both ways.
|Manitoba Public Insurance: According to a Consumers' |
Association of Canada study,
Manitobans pay some of the lowest auto rates
in the nation.
Image Source: MPI website
The fact still remains, though, that the upper corporate tax rate and personal income tax rates are very high in this province. But Manitobans in the bottom 40% receive more government transfers than they pay in income taxes. Of course, there's still the burden of regressive provincial sales taxes, less progressive property taxes, and user-fees, but Manitoba's progressive personal income tax system still smoothes the rougher, inegalitarian edges of the market distribution.
|Market vs After Tax income of Manitobans in various|
fifths of the income distribution (from bottom/lowest fight to top/highest
Image Source: Ian Hudson/PolicyFix
Then, of course, there are all the deductions that lead to a lower effective tax rates compared to the statutory tax rates.
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