PEI among most tax competitive provinces due to harmonization

CALGARY, Sept. 12, 2012 /CNW/ - PEI will dramatically improve its tax competitiveness with the implementation of the HST according to the Annual Tax Competitiveness Ranking by The School of Public Policy. Report authors Jack Mintz and Duanjie Chen analyzed the business tax regimes of the 10 provinces and ranked them based on their Marginal Effective Tax Rate (METR) on capital investment.

"The four Atlantic provinces are among the most tax-competitive within the OECD, with New Brunswick having the lowest METR among all jurisdictions," the authors write. "The common feature in these four provinces is eligibility for the federal Atlantic Investment Tax Credit, and a harmonized sales tax (HST) that has little distortive impact on capital investment."

Accounting for harmonization, the report lists the PEI's METR at 10.8 percent. This compares to a METR of 28.8 percent in 2011 when harmonization was not accounted for. The authors argue that this decrease will improve the province's ability to attract investment and grow their economy.

By comparison, New Brunswick has the lowest METR at 4.6 percent and B.C. has the highest at 27.7 percent. The national average for Canada is 19.9 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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