Seven-year analysis of total tax contribution trends
Companies provided data for the Total Tax Contribution survey
Average Total Tax Rate our survey participants were subject to in 2018
Business taxes and other government payments were identified in the survey
Welcome to the seventh annual Total Tax Contribution (TTC) survey of Business Council of Canada members. For this survey, 78 of Canada’s largest businesses provided tax data for the 2018 fiscal year, demonstrating the important role that large businesses play in economic growth and stability, by supporting public finances and creating good jobs for all segments of society.
The TTC for the survey participants in 2018 was $71.7 billion: $30.4 billion in taxes borne and $41.4 billion in taxes collected. Participants made a further $4.9 billion in other payments, such as royalties.
Taxes borne are a cost to the participating companies and reflected in their financial results (e.g. federal and corporate income taxes). Taxes collected are those generated by a company’s operations, but do not affect its financial results (e.g. payroll taxes withheld from employees and remitted).
Survey participants contributed 17.3% ($8.7 billion) of total federal corporate income tax revenue in 2018-19. They also contributed 16.0% of total provincial corporate income tax revenue ($6.2 billion).
The survey participants provided employment to more than one million people (1.08m) and paid an average wage of $69,733 (34% higher than the national average wage of $52,067). They also contributed an average of $25,591 in employment taxes per employee, reflecting taxes borne by the participants and collected on behalf of employees.
Survey participating companies contributed $42.7 billion of capital investment in 2018 (2017: $39.6 billion). 17.4% of total business investment in Canada.
30 companies have provided data in each of the seven surveys from 2012 to 2018. This enables us to look at 7-year trends on a like-for-like basis.
1. Taxes borne have increased by 30% between 2012 and 2018, while taxes collected increased by 40%.
2. The increase in taxes borne over this period has been driven by other taxes borne, which have increased by 41% since 2012. Corporate income tax has increased by 21% over this period and, being dependent on profits, has been a more volatile source of tax revenue for the government. The dip in 2015 was a result of weak economic growth, leading to lower profits and lower corporate income tax payments.
3. Other payments to the government are more dependent on commodity prices, and are therefore a more volatile source of tax revenue for the government, compared to taxes borne and collected.
4. The increasing TTC trend over the seven years was interrupted in 2015, when falling commodity prices (specifically oil) led to weak GDP growth. The Canadian economy picked up again in 2016 and registered strong growth in 2017 and 2018. In 2018, TTC + OPG are 37% higher than in 2012.
The chart shows the trends for the 30 companies that provided data for each survey from 2012 to 2018, taking 2012 as the base year. Please note that the different TTC elements are not equal proportions. In 2018 taxes borne are 40% of the total, taxes collected are 54% and other payments to the government account for 6% of the total contribution.
Oil price source: https://economicdashboard.alberta.ca/OilPrice