THUNDER BAY – The word from the McGuinty Government has been lower taxes. “”Our economy is moving in the right direction — we are recovering but we need to keep working towards more sustained growth. Together, we’ll continue creating jobs, investing in health care and education and making things a little easier for Ontario families,”stated Premier Dalton McGuinty as the fall session of the Ontario Legislature ended. The McGuinty Government claimed, “Ontario is moving towards economic recovery as tax cuts and job growth help make things a little easier for families”.
The Canadian Taxpayers Federation (CTF) have released its annual New Year tax change calculations which provide projected personal income and payroll tax changes taking effect January 1st, 2011. The CTF calculated the changes for a variety of income and family scenarios while adjusting 2011 income levels for inflation.
“Nearly every working Canadian will be paying more in income and payroll taxes in 2011,” said Derek Fildebrandt, CTF national research director. “In every province, family and income scenario, our research finds that the governments take from inflation-adjusted incomes will increase, in some case substantially.”
The 16 income and family scenarios in each province used in the CTF study averaged a 2 per cent increase in 2011 over 2010.
Payroll Tax Hike
Increases in EI and CPP payroll tax thresholds mean that anyone earning more than $44,200 will pay an additional $76, while employers pay an additional $110 in 2011 payroll taxes. Increases in payroll taxes are primarily attributable to the government’s creation of new, non-insurance based programs funded through EI premiums, causing the program to run a deficit.
“Rather than reform EI into an actual insurance program, workers are being stuck with the bill for new social programs,” stated Fildebrandt. “More than any other kind of tax, payroll taxes disproportionately hurt the working poor, meaning that they will see the steepest proportional increases on January 1st.”
The Good, the Bad and the Ugly Across Canada
“In previous years, there has almost always been winners and losers depending on income levels, family scenarios and what province one lives in. This year everyone loses, although some more than others,” said Fildebrandt.
While virtually every worker in Canada will pay more due to federal payroll tax increases, taxpayers in provinces with inflation rates above the national average will see a disproportionate increase in their effective tax bill, due to indexation gaps.
“Without a doubt, Ontarians are the biggest losers when it comes to tax changes on January 1st with an average 4.3 per cent increase in the scenarios we examined.”
After adjusting for inflation, a single earner Ontario family with an income of only $45,000 in 2010 will see a hike of a 5.1 per cent, costing that family an additional $389. A dual income family making $80,000 will pay an extra $590 (3.5 per cent) and a single income family making $100,000 will pay $1,035 (3.6 per cent) more.
“While its neighbour New Brunswick made outstanding advances in lowering and flattening income taxes last year, Nova Scotia became even less competitive this year with an average 2.8 per cent hike. That will cost a dual income family making $60,000, 2.9 per cent, or $345 more.”
Also seeing large increases on January 1st are British Columbians and Newfoundland and Labradorians with 2.9 per cent and 2.7 per cent hikes respectively, using the CTF’s income and family scenarios.
“British Columbians were expecting a 15 per cent cut in the provincial share of their income taxes on January 1st, but thanks to the cabinet flip-flop, they now face the second largest hike in the country after Ontario,” concluded Fildebrandt.