Growing personal income tax makes Canada uncompetitive among G7 countries

After 100 years of taxing Canadians, the personal income tax has made Canada uncompetitive, says a new collection of essays by the Fraser Institute.

“The fears policymakers had in 1917 when the personal income tax was introduced—that governments would become dependent on it and that it would hurt our competitiveness—have all come true 100 years later,” said William Watson, Associate Professor and Acting Chair of the Department of Economics at McGill University, Fraser Institute senior fellow and co-editor of The History and Development of Canada’s Personal Income Tax: Zero to 50 in 100 Years.

The book documents changes to the personal income tax over the last century.

For example, a hike to the top federal rate to 33 per cent in 2016 brought Ontario’s combined federal-provincial tax rate to 53.5 per cent, making it the third highest in the G7 behind only France (54.5 per cent) and Japan (55.9 per cent).

Compared to U.S. states, Canadian provinces have seven of the eight highest top combined rates, with Nova Scotia, Ontario, Quebec, New Brunswick, P.E.I. and Manitoba all over 50 per cent.

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