Corporate Canada’s own numbers show they don’t pay their fair share of taxes

Posted on April 17, 2014 in Governance Debates en/post
APR 17, 2014.   By PressProgress

The Canadian Council of Chief Executives set out to show corporate Canada is burdened by high taxes, and yet has gone and proven the opposite.

The recent report made the claim that the 63 corporations who participated in the voluntary survey paid an average Total Tax Rate of 33.4% towards a Total Tax Contribution of $40.6 billion.

Yet only $6 billion of this figure comes from federal corporate income tax (taxes on profits). Abig chunk of the rest comes from tacking on every conceivable payment to government and calling it a “tax,” such as $21.6 billion in “taxes collected.”

This included Employment Insurance and Canada Pension Plan payments totaling $14.1 billion in personal income taxes and employee contributions. We all know these aren’t actually paid by business: they’re collected on behalf of the government, but deducted from payroll by employers.

“These are, of course, conventionally and correctly regarded as personal rather than corporate taxes and have no impact on corporate after-tax profits. If these taxes are raised, the increase is immediately passed on to employees,” Broadbent Institute senior advisor Andrew Jackson wrote Thursday in the Globe and Mail.

“The remaining $19 billion or less than one-half of the ‘Total Tax Contribution’ is made up of ‘Taxes Borne’ by companies. It is calculated that ‘Taxes Borne’ represents 33.4% of pretax profits. However, several of the items included in this category are highly debatable and should not be seen as a levy on profits.”

This includes the employer portion of CPP and EI premiums, “which most economists would agree are really borne by workers, at least in the medium to long run,” and property taxes, “even though they are arguably in large part a fee paid for services,” writes Jackson.

So, when you strip it down, the CEOs’ report shows the effective corporate income tax rate is 17.5% — “well below the combined statutory federal-provincial rate of 25%.”


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