OTTAWA: The Canadian Taxpayers Federation (CTF) today released its annual New Year Tax Change calculations which provide projected personal income and payroll tax changes taking effect January 1st, 2010.
CTF researchers calculated the changes for a variety of income levels and family scenarios while adjusting 2009 income levels for inflation.
NEW YEAR SAVINGS FOR DIFFERNT INCOME LEVELS AND INDIVIDUAL/FAMILY SENARIOS
DETAILS ON TAX CHANGES TAKING PLACE IN EACH PROVINCE
“The main tax changes for 2010 involve small payroll increases and the HST in Ontario and BC. Meanwhile, large deficits and rising debt are putting pressures on governments to raise taxes further,” said CTF Federal Director Kevin Gaudet.
Payroll Taxes on the Rise, Again
While the EI and CPP tax rates have not increased, their thresholds have. This means that anyone earning more than $47,200 will pay an additional $44 in payroll taxes in 2010.
“These payroll tax increases are likely just the tip of the iceberg as the federal government looks to run major EI surpluses through higher EI rates over the next few years,” continued Gaudet.
PAYROLL TAXES CHART AND GRAPH, 1994 TO 2010
General Business Income Taxes
The federal government continues to reduce business income taxes. They drop to 18% from 19%.
Provincial Winners and Losers
“Every New Year sees winners and losers, and this year the hands-down winners are the taxpayers of New Brunswick,” said Gaudet. “The CTF has been a champion of lower, simpler and flatter taxes in Canada, and New Brunswick is moving in the right direction.”
“British Columbians can also expect modest tax relief, but deficit spending and the new HST threaten to undue those gains, however modest,” Continued Gaudet.
Regarding Ontario, Gaudet noted a meagre move to lower the first bracket by a single point and meaningful reductions for business income taxes. However, Gaudet pointed out that those gains will be offset by substantial increases for individuals and families with the tax hike in the top two tax brackets and the new HST.
Turning to the rest of Canada, Gaudet stated, “They’re just coasting. There were few other major income or payroll tax changes.”
The provinces of Manitoba, Nova Scotia and Prince Edward Island continue to refuse to automatically index their tax brackets each year, causing a stealth tax hike via bracket creep.
New Brunswick Storms Ashore
The first tax bracket rises from 9.18% to 9.3%. The second bracket drops from 13.52% to 12.5%. The third drops from 15.2% to 13.3%. The fourth bracket drops from 16.05% to 14.4%. This means that New Brunswick taxpayers not only take home significantly more money, but that they also will have a greater incentive to work harder with punitive marginal tax rates somewhat flattened.
- A single individual making $60,000 will save $488, bringing this individual near the national average with an effective tax rate at 27.3%
- A family with a single earner and two children making $80,000 will save $922, bringing their effective rate near the national average at 25.6%
“Compared with other provinces, New Brunswick is only moving towards an average standing in income taxes come January 1st. However, this is meaningful progress. New Brunswick can and should go further. However, its first priority, as is that of all governments, must be to get spending under control and balance the books,” stated Gaudet.
HST on its Way
With the HST coming into force July 1st, 2010, the CTF is demanding that the Campbell government in BC offset any potential tax grab. “While raising the Basic Personal Amount from $9,373 to $11,000 should go part of the way in providing needed relief for low-income earners, middle-class families are still getting slammed by the HST. In BC and Ontario, the HST needs to be reduced by at least 2 percentage points,” continued Gaudet.
In trying to appease voter anger over the HST, the McGuinty government in Ontario is making a meagre adjustment to the first income bracket, moving it from 6.05% to 5.05% while completely offsetting most gains for Ontarians by increasing the thresholds for the two surtaxes in place. For example, a family with a single earner and two children making $100,000 will save a paltry $106 due only to indexation amounts increasing greater federally and provincially than the CTF adjustments used for inflation. In essence, Ontarians can expect a modest tax hike in terms of real income – not including the impact of the HST.
“The HST will eat up a sizable portion of Ontarian’s take-home pay. Rather than bribing taxpayers with a one-time cheque and raising surtaxes to wipe out the modest moves made in the first bracket, McGuinty needs to lower the HST to as low as 10% in a way that is fair to everyone,” concluded Gaudet.
