ALTHOUGH MOST PROVINCES remain in deficit this year, there is pessimism about Canada’s economic outlook on many fronts, with most provinces disinclined to raise income taxes. So, except for the very rich, most Canadians are not exposed to higher provincial rates in 2015.
New Brunswick and Newfoundland implemented new top brackets, and the first budget of the New Democratic Party (NDP) government in Alberta, expected later this autumn, is likely to deliver on the NDP’s promise to introduce higher taxes for high net-worth individuals.
In other provinces, finance ministers have left personal income tax rates alone. They also held the line on sales taxes – except in the case of Newfoundland, which is raising its portion of the harmonized sales tax (HST).
There was only one significant sales tax reduction: New Brunswick lowered its small-business tax rate to 4% from 4.5%.
However, the Alberta government also promised not to implement the health-services premium that the previous Conservative administration had included in its March 24 pre-election budget. British Columbia and Quebec are the only provinces with a health-services premium tax.
The Alberta NDP also says it plans to raise the minimum wage over a period of years.
Here’s a look at the provinces in which personal income taxes were affected by government budgets:
BRITISH COLUMBIA. As planned, the temporary 2% surtax for individuals with taxable income over $150,000 ends Jan. 1, 2016. The budget also included tax credits for education-related coaching and child-fitness equipment.
ALBERTA. The NDP’s platform includes moving to a progressive tax system vs the previous system, which imposed a flat, 10% income tax rate on all taxpayers. The proposed graduated rates are: 12% on taxable income of $125,000-$150,000; 13% for $150,001-$200,000; 14% for $200,001-$300,000; and 15% for incomes of more than $300,000. This system would be accompanied by a reversal of various fee increases put in place by the Conservatives in their pre-election budget, including cancelling a new health-services premium planned by the Tories.
The NDP also plans to raise the minimum wage in stages to $15 per hour by 2018 from the current level of $10.20. The first increase – to $11.20 – was effective Oct. 1.
QUEBEC. The Liberal government’s budget included limits on social services transfers as lower income workers increase their employment income, as well as an enhanced tax credit for experienced workers via a rise in the age credit to 70 years from 65.
NEW BRUNSWICK. The new Liberal government introduced two new tax brackets: people with taxable income of $150,000-$299,000 will pay 21% in taxes; those with income of more than $300,000 will pay 25.75% in taxes for amounts over $300,000. Both taxpayer groups previously paid 17.84%.
In addition, the province increased premiums for its seniors’ prescription drug program and raised tobacco taxes.
However, the budget also cut its small-business tax rate, which dropped to 4% from 4.5% as of Jan. 1, 2015. The investor tax credit increased to 50% from 30% for individuals investing in eligible small businesses. The higher credit applies to investments made after March 31.
NOVA SCOTIA. The province is eliminating its “healthy living” tax credit for children’s sports and recreational activities as of Jan. 1, 2015. The province also raised some fees and increased tobacco taxes.
NEWFOUNDLAND AND LABRADOR. The province introduced two new tax brackets as of July 1, 2015: people with taxable income of $125,000-$175,000 will pay 14.3%; those with income of more than $175,000 will pay 15.3%. Both taxpayer groups previously had been taxed at 13.3%.
Newfoundland also is raising its portion of the HST, pushing it to 15% from 13%.
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