Ontario's tax competitiveness at risk: Report

CALGARY, Sept. 12, 2012 /CNW/ - In their Annual Tax Competitiveness Ranking, authors Jack Mintz and Duanjie Chen of The School of Public Policy analyze the business tax regimes of the 10 provinces and rank them based on their Marginal Effective Tax Rate (METR) on capital investment.

Ontario, at 19.8 percent, comes in close to the national average of 19.9 percent; however, the authors present a stern warning to the province regarding its stalled corporate tax rate reduction.

"Ontario will lose $7.5 billion in capital investment in the long run by forgoing plans to reduce the general corporate rate to 10 percent by mid-2013," the authors write. "Not carrying through with its final stage of reductions is a missed opportunity. It may be that the tax rate will be reduced when fiscal room becomes available, but most businesses will discount this promise unless the rate reductions are confirmed in legislation."

The authors also argue that if Ontario wishes to impose higher taxes on corporations, it is better off eliminating tax preferences or subsidies that distort the allocation of capital across sectors and activities. Examples include the Ontario Apprenticeship Training Tax Credit, Ontario Book Publishing Tax Credit, Ontario Business Research Institute Tax Credit, Ontario Computer Animation and Special Effects Tax Credit, and Ontario Film and Television Tax Credit, among many others.

New Brunswick is the most tax competitive province in Canada with a METR of 4.6 percent and B.C. is the least competitive with a METR of 27.7 percent.

The report can be found at www.policyschool.ucalgary.ca/publications

SOURCE: The School of Public Policy - University of Calgary

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