Our Citizenship, Paid For By Our Taxes
Brandon Sun, August 26, 2007 - David McConkey
“Ask not what your country can do for you,” U.S. President
John F. Kennedy famously said in 1961, “ask what you can do for
your country.”
Nowadays, somewhat regrettably, we are more likely to ask about the monetary costs and benefits of our citizenship.
Everyone in Canada pays the same federal income taxes. But citizens in
different provinces pay different provincial income taxes. In fact, in
recent years, the provinces have been forging quite different tax
regimes.
To explore this idea further, I compared provincial taxes for three
income scenarios: lower, middle, and higher. I used the computer
software system at Liberty Tax Service in Brandon. With the help of
Sean Blair, Operations Manager, I looked at provincial taxes (2006) for
Manitoba and our closest provincial competitors: British Columbia,
Alberta, Saskatchewan, and Ontario.
In Table A (see below), I ranked from the lowest to the highest
amounts, what a person earning $20,000 per year (or $9.60 / hour) would
pay in provincial income taxes.
Compare that to Table B. A family earning $65,000 per year, which is
about the national average, would pay these provincial taxes (assumes
one spouse earning, one spouse staying at home, and two children aged
eight and nine years old).
If you’re doing really well, check Table C. A person earning $250,000 per year would pay those provincial taxes.
These three scenarios obviously simplify many complexities. As another
example, Blair and I looked at a retired senior citizen. In that case,
annual income of about $14,000 from Old Age Security and the Canada
Pension Plan would be at the threshold of starting to pay federal
taxes. That taxpayer would be the best off in Manitoba as compared to
the other four provinces.
For the working people in the three examples, however, Manitoba imposes
the highest taxes. This could be a factor for those considering where
to work and live. Every province is faced with the task of keeping
people at home, and enticing others to move in.
“Manitoba has fallen behind the other Western provinces when it
comes to personal income taxes,” points out Blair.
“Manitoba is challenged to stay up with the others.”
Blair has even seen some people – particularly mobile single
young people comparing Manitoba and Alberta – change their
province of residence based on tax rates.
Of course, there are many factors determining where a person would
choose to live. Four important ones which would usually trump taxes:
availability of jobs, wage levels, affordability of housing, and
overall quality of life. But the discrepancy in taxes could be a
concern for long-term economic sustainability in Manitoba.
A person earning a good income should pay accordingly for the
government services that they benefit from. And they do benefit.
Business people make their money at least partly because of the
infrastructure provided by government: from roads and police to the
educated citizens who become workers and customers. Other people
– such as teachers and civil servants - are actually paid
directly by the government.
Doctors, for example, owe their living to government-funded Medicare.
But they can move to another province. According to a recent story in
the Brandon Sun, a new deal will raise the pay of Emergency Room
physicians in Manitoba to some $300,000 per year - among the highest
paid in the country. Was some of the increase needed to offset the
higher taxes that a doctor is required to pay when they live here?
In addition, there are also a host of other government initiatives that
come into play. Provinces set not only their income taxes, but also
such rates as sales taxes, health premiums (a factor in some provinces
like Alberta but not in others like Manitoba), Crown Corporation
utility charges, and provincial auto insurance rates.
When I lived in Saskatchewan a number of years ago, I saw a newspaper
advertisement during a provincial election that had a comprehensive
comparison. The NDP prepared a chart with a hypothetical family,
showing what its costs would be in every province in Canada: income
taxes, sales taxes, health premiums, auto insurance, hydro costs, the
works. The bottom line? The family did the best in NDP Saskatchewan.
I didn’t see a chart like that during the last Manitoba election:
neither by the NDP showing that its overall polices were the best, nor
by the Conservatives or Liberals showing that they had a better plan.
That kind of analysis would be fun for those of us who like looking at
lists of numbers. As well, it might be interesting for people choosing
where to live and work in terms of comparative citizenship.
Ranked from the lowest to the highest amounts, a person earning $20,000 per year ($9.60 / hour) would pay in provincial income taxes:
British Columbia $366
Alberta $391
Ontario $631
Saskatchewan $1,124
Manitoba $1,182
Table B
A family earning $65,000 per year, which is about the national average, would pay these provincial taxes (assumes one spouse earning, one spouse staying at home, and two children aged eight and nine years old):
Alberta $3,256
British Columbia $3,746
Ontario $4,373
Saskatchewan $4,928
Manitoba $5,743
Table C
A person earning $250,000 per year would pay these provincial taxes:
Alberta $23,246
British Columbia $30,796
Saskatchewan $33,366
Ontario $36,896
Manitoba $39,040
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