May 7, 2009, Toronto – According to
PricewaterhouseCoopers' (PwC) total tax contribution study, Canadian businesses
are subject to the second highest number of taxing points (295) behind only the
US.
Canada also has the second highest number
of taxes borne and collected (72).
"The survey results emphasize the
critical role of large enterprises in generating tax revenue for Canadian
governments. Indeed, the results show that 37 per cent of the annual cash value
created by large businesses goes to governments," says Tom O'Brien, PwC
Canada tax partner and author of the study. "The complexity and the cost
of compliance affect competitiveness, and Canada faces a major challenge on
this front. In this year's survey, Canada's mix of federal, provincial and
territorial taxes ranks as the second most complex among the major countries
worldwide in which total tax contribution studies were conducted. This excessive
complexity hurts large and small businesses alike."
The 2008 study carried out in cooperation
with the Canadian Council of Chief Executives (CCCE), encompasses all taxes
paid by a company as well as all taxes collected by the company from its
employees and customers on behalf of governments. A company's total tax
contribution is therefore a measure of its total impact on government revenues.
The 23 respondents, representing some of
the largest Canadian businesses bore $4.1 billion in Canadian taxes in 2007.
Federal and provincial corporate income taxes were the most significant
proportions of taxes borne at $1.5 billion and $0.7 billion. These amounts correspond
to a contribution of 35 per cent and 18 per cent of total taxes borne,
respectively.
This year, the study was expanded to
collect information on taxes and other payments to government allocated by
provinces. In addition to the 73 federal, provincial and territorial taxes,
there are also municipal taxes on property and other areas imposed by the many
local governments throughout Canada. Of total taxes borne by participants,
federal taxes comprise 49 per cent and provincial and territorial taxes
comprise 51 per cent.
"Canada's multiple jurisdictions mean
that a company operating from coast to coast has 295 potential tax
obligations," says David Stewart-Patterson, executive vice president of
the CCCE. "The sheer number of forms to be filed creates huge compliance costs
for businesses and an expensive administrative and enforcement burden for
governments. This complexity hurts the competitiveness of large and small
businesses alike."
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