Canadian Manufacturing

Study says Quebec companies most heavily taxed in Canada, US

Cutting government assistance to pay for lowering tax burden would foster productivity growth



MONTREAL—A new University of Montreal business school study says Quebec companies are by far the most heavily taxed in Canada and the United States, even after accounting for generous financial assistance from government.

The HEC Centre for Productivity and Prosperity says Quebec companies pay 26 per cent more in taxes than the Canadian average and face almost double the tax burden of U.S. companies.

Taxes represent 5.1 per cent of the gross output of Quebec businesses, compared with 4.1 per cent for Canada and 2.9 per cent for the United States.

Payroll taxes are mainly responsible for the higher tax burden.

They represent 22 per cent of total taxes, compared with an average of 10 per cent for Canada as a whole and 12 per cent for Ontario.

The United States and many Canadian provinces don’t have payroll taxes.

Quebec companies face a higher tax burden even after subtracting $17-billion in government assistance, representing 3.6 per cent of the value of the gross output.

Centre director Robert Gagne says the Quebec model of taxing companies heavily and then redistributing it to achieve economic, social, cultural and other objectives hasn’t been very effective.

The study suggests that cutting government assistance for businesses to pay for lowering the tax burden would “foster productivity growth and improve the standard of living in Quebec.”

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