Amid economic woes, tax burden for companies increased, survey finds

At a time when the Canadian economy was under pressure from the global fall in resource prices, large corporations continued to remit over 40 per cent of the annual value they created to federal, provincial/territorial and local government, a new study by PwC shows.

“Every year, Canadian businesses make major contributions to Canada’s economy, communities and public finances. Complying with federal, provincial and municipal taxes, requires businesses to make significant investments in time and resources. It is important for governments and business to work together to improve the efficiencies of Canada’s tax systems in order to reduce compliance costs”, said Peter van Dijk, National Tax Policy Leader, PwC Canada. “Large Canadian businesses are also creating a path for the country’s future as the survey results indicate they continue to make capital investments and invest in R&D.”

Conducted by PwC in partnership with the Business Council of Canada, the survey includes 87 leading Canadian enterprises, including banks, insurance firms, retailers, telecommunications providers, and energy and mining companies. It found that the Total Tax Rate, a measure of the overall tax burden on participants, increased to 37.5 per cent in this year’s survey – the highest measure in the four years the data has been collected.

Overall, the report showed that the companies contributed a total of $63.8 billion to public finances at the federal, provincial/territorial and municipal levels. This total, equivalent to about the amount governments spend on K-12 education, includes taxes borne by the company, taxes collected on behalf of employees and other payments such as royalties and fees. All told, the companies paid 68 different types of taxes and fees.

 “This survey illustrates that when the energy and resource sector hurts, the impact echoes across the country,” said The Honourable John Manley, President and Chief Executive Officer of the Business Council of Canada. “The contributions of these firms to public finances are significant, especially during times when the overall economy is facing challenges. As Canada faces an increasingly complex and uncertain global environment, an understanding of the interconnected tax situation is key.”

The study also found that despite the downturn, companies continued to make significant capital investments - $37 billion - which is vital for their future growth and Canada’s prosperity.  Click here to access the report.

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