Quebec and Ontario Among the Most Taxing Regions for Small Businesses

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Quebec, Nova Scotia and Ontario are the three most taxing provinces for small businesses, according to a new report issued by the Canadian Federation of Independent Businesses (CFIB). It’s the CFIB’s second annual “Small Business Provincial Tax Index”.

Indeed, Canada’s two most populous provinces (and Nova Scotia) continue to lag behind most of the country when it comes to small business-friendly tax systems. Alberta, Saskatchewan and New Brunswick were ranked as the best places to start businesses when it comes to ease of taxation.

“A complicated and costly tax system burdens small business owners, and is a barrier to economic growth and job creation,” said the report’s author Marvin Cruz. “The Index is meant to give jurisdictions a sense of how small business-friendly their tax systems are.”

The report didn’t just take into consideration the taxes that businesses face from provincial and federal jurisdictions, but it examined how the provinces stack up against one another by examining 53 indicators in five major areas of tax policy: premiums and payroll taxes; sales and excise taxes; corporate income taxes; personal income taxes; and property taxes.

The provinces received the following scores on a scale of 0 to 10, where 0 is worst and 10 is best:

Province 2013 Rank 2013 Index Score 2009 Rank
Alberta 1 8.53 1
Saskatchewan 2 7.01 3
New Brunswick 3 6.98 2
Newfoundland and Labrador 4 6.17 6
Prince Edward Island 5 5.90 7
Manitoba 6 5.67 5
British Columbia 7 5.65 4
Ontario 8 5.59 9
Nova Scotia 9 5.22 8
Quebec 10 3.97 10

Alberta and Quebec, which were best and worst by wide margins, were also at the top and bottom of the index when CFIB last ranked the provinces in 2009. Newfoundland and Labrador and Prince Edward Island showed the largest improvements over their 2009 rankings, each moving up two positions, from 6th to 4th and 7th to 5th respectively.British Columbia, meanwhile, dropped from 4th to 7th position.

The CFIB recently came out with another report that was of interest to Canadians: its “Communities in Boom: Canada’s Top Entrepreneurial Cities 2013,” listed the Greater Calgary area as the top place in Canada to start a business.

Interestingly, CFIB president Dan Kelly said small business owners consistently tell them that complicated, costly tax systems are the biggest obstacle to growth. “Yet as we celebrate small business month, some governments are contemplating new taxes for infrastructure, prescription drugs or recycling and many finance ministers are pushing for a hike to the grand-daddy of payroll taxes – CPP/QPP premiums.”

I’ve no doubt that their data told them that, however most often it seems access to capital has been startups and SMEs biggest obstacles. Perhaps Kelly threw both concerns under the larger “finances” umbrella.