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The Canadian Taxpayers Federation (CTF) has released a report on the impact of the federal and provincial tax changes that have now entered into force.
The CTF said that the two main federal measures are changes to Employment Insurance (EI) premiums and the first full-year of the means-tested Canada Child Benefit (CCB). For the last four years, the EI rate has been 1.88 percent for employees and 2.63 percent for employers on insurable wages. From January, EI rates will fall to 1.63 for employees and 2.28 percent for employers. According to the CTF, this payroll tax cut is worth up to CAD132 (USD98) for employees and CAD185 for employers.
Turning to the impact of the CCB, the CTF said that the shift away from the Universal Child Care Benefit (UCCB) means "higher benefits for most families with children and slightly lower income taxes since families paid income tax on the UCCB benefits while the CBB is tax-free." However, the CTF added that because the CCB is means-tested, high-income families will receive lower child benefits in 2017.
On the provincial tax front, Newfoundland and Labrador will see increases to the tax rates for all five tax brackets. "This means a tax increase for almost everyone," the CTF said. A carbon tax was introduced in Alberta on January 1, and Ontario's cap-and trade system commenced on the same date.
Manitoba and Alberta will index their income tax brackets for 2017, with Prince Edward Island and Nova Scotia now the only provinces not to do so. Ontario and New Brunswick do not index their top tax brackets.
The CTF said that Quebecers will see some of the largest tax reductions, with families earning CAD250,000 paying CAD1,409 less in tax due to the abolition of the provincial health tax and changes to EI. It added that, excluding the provincial carbon tax, a two-child, single-income family in Ontario earning CAD60,000 a year will pay CAD122 less in taxes and receive an extra CAD1,824 in CCB payments. A British Columbian couple with no children earning CAD100,000 will see a small tax cut of just CAD25.
CTF Federal Director Aaron Wudrick commented: "High income earners in most provinces will pay more. But for the majority of Canadians, these two changes will mean more money in their pockets."
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