Unusually high payroll taxes help make Quebec companies the most heavily taxed in North America, says a new study.
The study, by HEC Montréal’s Centre for Productivity and Prosperity, indicates that Quebec companies pay 26 per cent more in taxes than the Canadian average. Compared with the United States, Quebec firms shell out almost double what companies south of the border pay, says the report.
The results accounted for the various provincial programs providing financial assistance to companies.
Payroll taxes in Quebec represent 22 per cent of total taxes, while the average for all of Canada is 10 per cent.
“The tax burden borne by Quebec firms is about 26 per cent higher than the average for all of Canada and for Ontario,” says the study.
“In comparison with the United States, Quebec’s low tax competitiveness is even more striking. The tax burden for firms in Quebec is almost 100 per cent higher than for U.S. businesses.”
The report adds that “the province’s generous direct assistance programs for businesses are not enough to change its position in North America.
“Despite its generosity, Quebec remains the jurisdiction in North America (not including Mexico) with the highest business tax burden.”
The study goes on to say that governments around the world have been striving to reduce the business tax burden. Quebec’s strategy of taxing business as a whole more heavily and then redistributing more of this wealth to a select few firms through aid programs appears to be the exception.
Easing the tax burden – particularly the payroll tax – and paying for it by cutting government assistance “would benefit all businesses in Quebec and could foster productivity growth,” says the centre’s 2012 Overview.