CTF releases federal and provincial tax changes for 2011

All income levels in all provinces paying more, with low and middle income families seeing steepest increase
|Canadian Payroll Reporter|Last Updated: 01/05/2011

The Canadian Taxpayers Federation (CTF) released its annual tax change calculations which provide projected personal income and payroll tax changes which came into effect Jan.1, 2011.

The CTF calculated the changes for a variety of income and family scenarios while adjusting 2011 income levels for inflation. 

“Nearly every working Canadian will be paying more in income and payroll taxes in 2011,” said Derek Fildebrandt, CTF national research director. “In every province, family and income scenario, our research finds that the governments take from inflation-adjusted incomes will increase, in some case substantially.”

The 16 income and family scenarios in each province used in the CTF study averaged a two per cent increase in 2011 over 2010.

Increases in employment insurance (EI) and Candian Pension Plan (CPP) payroll tax thresholds mean that anyone earning more than $44,200 will pay an additional $76, while employers pay an additional $110 in 2011 payroll taxes. Increases in payroll taxes are primarily attributable to the government’s creation of new, non-insurance based programs funded through EI premiums, causing the program to run a deficit.

While virtually every worker in Canada will pay more due to federal payroll tax increases, taxpayers in provinces with inflation rates above the national average will see a disproportionate increase in their effective tax bill, due to indexation gaps.

“Without a doubt, Ontarians are the biggest losers when it comes to tax changes on Jan. 1 with an average 4.3 per cent increase in the scenarios we examined,” said Fildebrandt.

After adjusting for inflation, a single earner Ontario family with an income of only $45,000 in 2010 will see a hike of a 5.1 per cent, costing that family an additional $389. A dual income family making $80,000 will pay an extra $590 (3.5 per cent) and a single income family making $100,000 will pay $1,035 (3.6 per cent) more.

“While its neighbour New Brunswick made outstanding advances in lowering and flattening income taxes last year, Nova Scotia became even less competitive this year with an average 2.8 per cent hike," said Fildebrandt. "That will cost a dual income family making $60,000, 2.9 per cent, or $345 more.”

British Columba and Newfoundland and Labrador will also see large increases with 2.9 per cent and 2.7 per cent hikes respectively, using the CTF’s income and family scenarios.

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