Who pays tax in Canada?

[August1991]

I don't really mean this as a new thread, but I would like to clarify this for a thread about equalization payments. Let me quote myself:

In tax year 2002, the roughly 100,000 individuals who filed with total income assessed greater than $250,000 (income from all sources) earned, as a group, $55 billion. They paid, as a group, federal and provincial income taxes of $18 billion. (That's about 10% of all income taxes paid in Canada.)

Link

The data above is from Revenue Canada (CCRA), available in the link above. The most recent data is available from here. It provides provincial breakdowns.

The following link to the Canadian Tax Foundation provides perspective:

For each calendar year, the CCRA publishes statistics on the personal income tax system; the publication is officially entitled "Income Statistics," and is commonly known as the Green Book. First published in 1946, the Green Book is distributed to the news media, libraries, members of Parliament, officials of federal, provincial, and municipal government departments, and academic researchers. The Green Book is best known for its data on the number of high-income individuals who do not pay federal income tax for a given year, but has also been used to analyze the kiddie tax and many other tax policy issues.

[August1991]

The following data refers to Federal Income Tax in the taxation year 2002. Data available here.

Federal returns filed in Alberta: 2.2 million

Federal returns filed in Ontario: 8.7 million

Federal returns filed in Quebec: 5.6 million

Federal returns filed in Canada: 22.9 million

Total federal income tax collected in Alberta: $10.5 billion

Total federal income tax collected in Ontario: $38.5 billion

Total federal income tax collected in Quebec: $17.8 billion

Total federal income tax collected in Canada: $86.7 billion

Percentage of filers who paid no federal income tax, Alberta: 29.7%

Percentage of filers who paid no federal income tax, Ontario: 30.7%

Percentage of filers who paid no federal income tax, Quebec: 33.3%

Percentage of filers who paid no federal income tax, Canada: 32.1%

Average federal income tax paid by filers in Alberta: $4678

Average federal income tax paid by filers in Ontario: $4432

Average federal income tax paid by filers in Quebec: $3162

Average federal income tax paid by filers in Canada: $3794

Average federal income tax per capita in Alberta: $3369

Average federal income tax per capita in Ontario: $3180

Average federal income tax per capita in Quebec: $2391

Average federal income tax per capita in Canada: $2795

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If one is looking for truly dramatic statistics, I see none. (Am I missing something? On average, Albertans paid about $1000 more in federal income tax than Quebecers did. Nothing new there.)

[Renegade]

Said another way, Albertan tax filers paid 47% more tax than Quebecers.

[Riverwind]

Said another way, Albertan tax filers paid 47% more tax than Quebecers.

Someone said something about Lies, Damned Lies and Statistics.

I am think that these numbers do not include province income tax for Quebec since I believe Quebec income tax goes directly to the Quebec gov't and not through the CCRA. If this is the case then comparisons to Quebec and other provinces are meaningless.

If you divide the total tax payable by the total taxable income you get:

Alberta: 21.1%

Quebec: 13.6%

Ontario: 21.8%

Canada: 19.5%

As you can see Quebequers appear to have an amazingly low tax rate which cannot be explained by a lower average income. The only logical conclusion is the Quebec provincial income tax is not included.

Here are some numbers which make more sense:

Total taxable income (Millions):

Alberta: 70,656.5

Quebec: 136,862.5

Ontario: 263,176.9

Canada: 622,452.0

Average taxable income:

Alberta: 44561

Quebec: 36384

Ontario: 43692

Canada: 40116

In other words Albertans earned 22.5% more that Quebequers, therefore, you would expect them to pay more tax. You cannot calculate how much more tax Albertans paid because we don't have the numbers for Quebec provincial tax.

[August1991]

Said another way, Albertan tax filers paid 47% more tax than Quebecers.

<{POST_SNAPBACK}>

Maybe.

First, I may have made an error in the calculations. (I don't think I miscalculated.)

Second, I used federal income tax. I ignored GST, and in some provinces, there is federal compensation for provincial income taxes.

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What do I think?

Alberta pays more tax because ordinary Albertans have high incomes and so pay more income tax. Yet, the richest people of all are in Ontario. IOW, Federal Canada's progressive tax system is a tax on very rich people in Ontario, and ordinary people in Alberta.

Also? People in Quebec wisely under-declare taxable income, both federal and provincial.

[Riverwind]

Also? People in Quebec wisely under-declare taxable income.

I think the CCRA does not have Quebec provincial tax numbers so they are not included in these figures (see my previous post).

[August1991]

Also? People in Quebec wisely under-declare taxable income.

I think the CCRA does not have Quebec provincial tax numbers so they are not included in these figures (see my previous post).

<{POST_SNAPBACK}>

Sparhawk, you are playing the federal government game - the game of the federal Liberal Party.

"The calculation is complicated. Trust us."

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Sparhawk, what is Canada?

[Riverwind]

Also? People in Quebec wisely under-declare taxable income.

I think the CCRA does not have Quebec provincial tax numbers so they are not included in these figures (see my previous post).

Sparhawk, you are playing the federal government game - the game of the federal Liberal Party.

What on earth are you talking about? I calculated the tax paid as a percentage of taxable income. For every province the numbers came out to about 20% except Quebec where the numbers come out to 13%. Something does not add up. You are trying to draw conclusions from inaccurate data.

Think about it: in order to accurately report Quebec income tax the CCRA would have had to request that the Quebec tax agency provide them with figures and then teh CCRA would have has to merge those numbers with its own. It is very unlikely that happened.

That table reports combined provincial and federal income tax for all provinces (20% of taxable income between 30K to 40K sounds about right) except Quebec. In other words, the CCRA only reports tax paid to the CCRA on federal tax returns. The Quebec government requires seperate tax returns that go to a different agency.

[August1991]

What on earth are you talking about?

Sparhawk, why do you think it is difficult to compare taxation rates in different provinces? Why do you think we are having this discussion? (If it were easy and obvious to compare taxes in different Canadian provinces, would we discuss this?)

Am I drawing conclusions from accurate data? No. I am trying to draw conclusions from available data.

Sparhawk, what planet are you on?

[Bakunin]

IMO, its tricky. I have another theory August. Its a well known fact that quebeckers get paid less, pay higher provincial taxes but get stuff at a lower cost (For sample: electricity, housing, etc cost less.) and get more services.

We pay the public sector less money and the private sector pay their employe less money than in the ROC. It has been like this since our colonialist and religious past, it improved alot since the quiet revolution but the gap is closing slowly. We are not cheap labor anymore since we took in hand our economy but it will need a few more generation before our national wealth grow and expand to attain the level of our neighbor. Another factor is the religion, it played a major role and partly explain the under acheivment and evolution of our economy before the 60's.

Some people tend to beleive that the quiet revolution slowed down quebec economy at the expense of ontario. Yes its slowed down but it was a good thing and it was necessary because the wealth was concentrated in the hand of a few very rich people and outsiders. Now it turned upside down, quebec is where the equity is the best but its at the expense of the richer ppl. Its not a bad thing for the middle class but on the other hand, its may not be the best way to build an economy.

There is no conspiracy, quebeckers are less rich and forgive us because we only started to take ourself in hand and face our problem in the 60's but i think getting rid of the Eq payment would help us face our newer problem caused after the quiet revolution ( the fact that our government is too big). After the sucess of the quiet revolution, quebeckers started to think that the government could solve all our problem and it got bigger and bigger and bigger, just like our debt.....

[Guest eureka]

The usual "Nationalist" claptrap, Bakunin!

[Riverwind]

Am I drawing conclusions from accurate data?  No.  I am trying to draw conclusions from available data.

The data you provided a link to summarizes the totals from federal income tax returns. These totals appear to include the provincial and federal income tax component from all provinces except Quebec. As a result, these numbers are useful if you want to compare the tax paid by Albertans to tax paid by Ontario-ans or Manitobans. However, you cannot compare the tax paid by Alberta to Quebec by only using these numbers.

You you are going to use statistics to draw conclusions you should understand the limitations of the stats you use - otherwise you are guilty of spreading misinformation and falsehoods. For example, Renagade looked at your numbers and said:

Said another way, Albertan tax filers paid 47% more tax than Quebecers.

This statement is incorrect since it does not include the amount of income tax that Quebequers pay directly to the provincial government. Unfortunately, Renagade's conclusion was reasonable based on the way you presented the data which made everyone think the numbers represented the TOTAL income tax bill for each province.

You entire post demonstrates the dangers of using statistics to make political point. In your case the mistake was unintentional, however, there are many examples of deliberately manipulated data for political purposes.

[Argus]

Also? People in Quebec wisely under-declare taxable income, both federal and provincial.

<{POST_SNAPBACK}>

Wisely is one term, I suppose.

What you are actually saying is that Quebecers are generally less honest than other Canadians.

[August1991]

I am think that these numbers do not include province income tax for Quebec since I believe Quebec income tax goes directly to the Quebec gov't and not through the CCRA. If this is the case then comparisons to Quebec and other provinces are meaningless.

Sparhawk, all of the data described above refers only to federal taxes. I did not include any provincial income taxes, whoever collects them.

Nevertheless, you are quite right to make your point about inexact data, and you are also right to state that I should have made it more explicit. So, I'll admit my error here.

Well, sort of. Welcome to income tax, Canadian style.

There is something called the "Quebec abatement":

The Quebec Abatement consists of a reduction of 16.5 percentage points of Basic Federal Tax (BFT) for all tax filers in Quebec, representing approximately $3.1 billion in 2002-03.

StatCan

All Quebec filers reduce their federal income tax by 16.5% (receive an abatement) and so it would have been perhaps more accurate (more or less) to add 16.5% to the stat on average federal tax paid by Quebec filers, note above.

But I don't know.

In theory, this abatement allows the Quebec government to have higher income taxes. The federal government steps away from shearing the sheep and lets the Quebec government take its place. (BTW, this abatement was first negotiated in the 1950s by Duplessis when he introduced a provincial income tax system.)

What happens in other provinces? Well, in theory, the federal government collects more money (since there's no abatement) but then offers the money back to the provinces in special grants that it does not offer to Quebec.

So, Renegade is perfectly correct to say that Alberta filers pay on average 47% more money to the federal government than Quebec filers.

But then, in theory, the federal government returns more money to the Alberta government than it does to the Quebec government.

Huh?

Well, that's why I said that this issue is very, very complicated. So complicated, that we must ultimately trust the powers-that-be.

Lastly, my main conclusion from looking at the tax data in the first post of this thread (accurate or misleading) was that there's no smoking gun. Albertans pay more income tax to the federal government than Ontarians or Quebecers but the difference is not outrageous.

[August1991]

Also? People in Quebec wisely under-declare taxable income, both federal and provincial.

<{POST_SNAPBACK}>

Wisely is one term, I suppose.

What you are actually saying is that Quebecers are generally less honest than other Canadians.

<{POST_SNAPBACK}>

I was being flippant. No nationality has a monopoly on dishonest behaviour.

(But I am inclined to believe that taxes are too high... )

[Riverwind]

There is something called the "Quebec abatement":

The Quebec Abatement consists of a reduction of 16.5 percentage points of Basic Federal Tax (BFT) for all tax filers in Quebec, representing approximately $3.1 billion in 2002-03.

This explains the discrepency in the numbers that I observed.