IMAGES

Peter Redman, Financial
Post

Jack Mintz, head of the
C.D. Howe Institute, says the OECD report understates Canadians' real tax
burden.

Tax burden high but shrinking: Tax represents 33% of GDP, down
from 33.8%, OECD says
National Post
Thu 13
Oct 2005
Page: A6
Section: Canada
Byline: Eric Beauchesne

Source: CanWest News Service

OTTAWA - Canadians' tax burden eased last year to its
lowest level in about two decades, but remained a lot higher than the taxes
borne by Americans and Mexicans, according to figures released yesterday.

The tax revenues for all levels of government in Canada amounted to 33% of
gross domestic product, down from 33.8% in 2003, and continuing a decline from a
peak of about 36% at the start of the last decade, the Organization for Economic
Co-operation and Development said in its comparison of the tax burdens in
industrial countries.

The burden here is also below that of the industrial countries as a whole,
which in 2003, the latest year for which full comparisons are available,
averaged 36.3%.

However, the 2004 tax burden here was still a lot higher than the 25.4% U.S.
level and the 18.5% in Mexico, where taxes as a share of GDP have also been
declining.

Jack Mintz, a
tax lawyer and head of the C.D. Howe Institute, said the OECD report understates the real
tax burden on Canadians because it doesn't include other government revenues,
such as from royalties and user fees.

And Canadian governments rely more on those revenues than, for example, the
United States, Mr. Mintz said.

Canada's total tax burden is equal to 41.7% of GDP, 30% higher than the 31.9%
total U.S. tax burden, Mr. Mintz said.

The C.D.
Howe Institute
last month called for a multi-year package of tax relief from federal and
provincial governments in a report that calculated that Canada taxes investment
more heavily than any competing country except China.

The OECD, meanwhile, noted Canada is also among the countries that are most
dependent on income taxes.

"Taken together, taxes on personal and corporate incomes remain the most
important source of revenues used to finance public spending in half of all OECD
countries, and in four of them -- Australia, Canada, Denmark, and New Zealand --
the share of income taxes in the mix exceeds 45 per cent," it said.

"Most experts would agree that income taxes pose the highest economic cost on
the economy, particularly because they fall on investment and savings decisions
by individuals and businesses," Mr. Mintz said. "Those are the taxes that hit
the growth in the economy the hardest."

But Mr. Mintz said the OECD report is positive in that "at least" the tax
burden is going down slowly, though he wondered whether that has come to an end
given last year's 15% increase in federal spending.

But the OECD report notes the provinces impose a relatively heavy share of
the tax burden in Canada.

The provinces accounted for 38% of the tax burden in Canada, the highest for
the states or provinces of any industrial country, it said.

Illustration:
• Black & White Photo: Peter
Redman, Financial Post / Jack Mintz, head of the C.D. Howe Institute, says
the OECD report understates Canadians' real tax burden.

Edition: Toronto / Late
Story Type: Business;
Statistics
Length: 457 words