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A survey of 80 leading Canadian enterprises shows that they collectively contribute more money to governments in taxes and other payments than they earn in after-tax profit.
The survey found that for every $100 generated by the companies, $40 went to Canadian governments at the federal, provincial and municipal levels. That includes corporate taxes, property taxes, payroll taxes, non-refundable taxes on business inputs and other costs borne by the companies themselves, as well as employment and consumer taxes they collect on behalf of governments.
In comparison, $32 out of every $100 is earned as after-tax profit and either retained for reinvestment in the business or distributed to shareholders. After-tax wages and salaries paid to employees account for the remaining $28.
PricewaterhouseCoopers (PwC) conducted the survey in partnership with the Canadian Council of Chief Executives. Eighty leading Canadian enterprises, all members of the CEO Council, took part. The participants included banks, insurance firms, retailers, telecommunications providers, energy companies and mining companies.
“The survey underscores the importance of Canada’s leading businesses as generators of government revenue,” said The Honourable John Manley, President and Chief Executive Officer of the CEO Council. “The contributions of these firms to public finances are significant, improving the economic well-being not only of the communities in which they operate, but of the country as a whole.”
Collectively, the firms that participated in the survey made a Total Tax Contribution of $58.2 billion in 2013. In addition to being a major source of government revenue, survey participants employed over one million Canadians and paid them an average annual income of $63,000, well above the national average.
Corporate income taxes represent only one component of companies’ total contribution to public finances. For every $1 of corporate income tax they paid, participating businesses contributed an additional $1.01 in other business taxes and $0.53 in other payments to government. The average total tax rate for survey participants in 2013 was 33.9 per cent.
The survey also shows that complying with tax regulations and requirements imposes a significant cost on Canadian firms. The companies that took part in the survey were subject to 68 different kinds of taxes and other government payments. They spent on average of $3.9 million each and required 17 full-time employees to fulfil their tax obligations.
“The complexity of our tax system, and the high cost of compliance, have an impact on our economy’s competitiveness,” Manley said. “By simplifying the tax system, governments can make Canada a more attractive place to build a business and create new, high-value jobs.”
Copies of the PwC Canada Total Tax Contribution report are available here.
The Canadian Council of Chief Executives is the senior voice of Canadian business, representing 150 chief executives and leading entrepreneurs in all sectors and regions of the country. The Council’s member companies collectively employ 1.5 million Canadians and are responsible for most of Canada’s private-sector investments, exports, workplace training and research and development.