Overview of the Quebec tax system – 2026 edition
A report led by Tommy Gagne-Dube and Suzie St-Cerny for the Research Chair in Taxation and Public Finance, the University of Sherbrooke
This year’s edition offers a detailed and current overview of Quebec’s tax system presented through more than 100 charts, tables and sidebars. The report covers topics such as the tax burden, its structure, tax expenditures, the progressivity of the tax system and its impact on income inequality. The report reveals that Quebec is still the province with the highest tax burden in Canada and ranks 11th out of 32 advanced OECD economies as a proportion of GDP. The report also highlights the province’s dependence on income tax, the significant progressivity embedded in the province’s tax system, and the substantive role of taxation in reducing inequality. The full report and a document outlining 10 key findings are available in French here:
By Tommy Gagné-Dubé and Suzie St-Cerny | Research Chair in Taxation and Public Finance, the University of Sherbrooke
Cette édition du Bilan propose un portrait détaillé et actualisé de la fiscalité québécoise à partir de plus de 100 graphiques, tableaux et encadrés, couvrant notamment le poids de la fiscalité, sa structure, les dépenses fiscales, la progressivité du régime et ses effets sur les inégalités de revenus. Elle montre entre autres que le Québec demeure la province où le poids de la fiscalité est le plus élevé au Canada, tout en se situant au 11e rang sur 32 économies avancées de l’OCDE en proportion du PIB. L’analyse met également en évidence une forte utilisation des impôts sur le revenu, une progressivité marquée du régime fiscal et un rôle significatif de la fiscalité dans la réduction des inégalités. Le Bilan complet ainsi que le document des 10 faits saillants sont disponibles ici:
Tax havens cost Canada some $15 billion a year in revenue. Is Ottawa’s crackdown working?
By Heather Scoffield | Originally written for the Toronto Star
Canadian parliamentarians are taking a crack at squeezing out more government revenue from tax havens, and we wish them all the luck and stamina.
Tucked away from the Conservative-to-Liberal floor-crossings and the nail-biting confidence-vote drama that have dominated this Parliament, MPs on the House of Commons finance committee were contemplating all the places where corporations put their profits.
What initially started as an Opposition “gotcha” strategy meant to tie Prime Minister Mark Carney to the tax practices of Brookfield Asset Management has turned into a fairly serious exercise to tackle one of the thorniest issues in fiscal policy.
Political soap opera this ain’t, but the implications are in the billions of dollars every single year — and Canada is missing out.
That’s anything but new, and Canada is far from alone. Tax avoidance and its more nefarious cousin, tax evasion, have bedevilled policymakers for time immemorial.
Over the years, Canada has thickened its tax code, added auditing resources and investigative powers to the Canada Revenue Agency and law enforcement, joined complex international agreements and is always adopting more advanced technology in the hopes of gaining the upper hand.
But companies and wealthy individuals often seem to be a step ahead, especially those that are well-resourced enough to navigate increasingly complex rules and murky financial transactions.
Taxing corporations and high net-worth families fairly is more important than ever. Canada needs the economic activity, governments need the tax revenue, and Canadians need to know that the tax system that they pay into — year in, year out — is equitable.
Taxing corporations and high net-worth families fairly is more important than ever. Canada needs the economic activity, governments need the tax revenue, and Canadians need to know that the tax system that they pay into — year in, year out — is equitable.
“There’s a constant balancing act between competitiveness — we want our businesses and our multinationals to succeed when they’re competing in foreign markets — and a desire to not facilitate inappropriate tax avoidance and erode the Canadian tax base,” Trevor McGowan, associate assistant deputy minister at the Department of Finance, told the committee.
Canada, like many other countries, is thirstier than ever for business investment, especially now that the global economy is in an uproar and the United States is no longer a dependable source of mutual benefit. And with trust in public institutions in a fragile state, the federal government can’t afford to be lenient.
Parliamentarians find it hard to determine the scope of the problem. CRA has measured the “tax gap” — the difference between what corporations should be paying and what they actually pay — in the past and says that in 2018 it amounted to between $1 billion and $3 billion a year, lower than previous years.
But CRA’s efforts focus on tax evasion (actually breaking the law) rather than tax avoidance, which is just playing footsie with the rules. And they admit up front that their estimate is uncertain.
Independent analysts who try anyway to measure the cost of tax avoidance come up with far higher numbers. Canadians for Tax Fairness figures Canada misses out on $15 billion a year because of tax haven abuse.
But as the prime minister himself said when he was faced with tough questions about Brookfield during the election campaign last spring, setting up corporate shop in a low-tax jurisdiction is legal and a legitimate business strategy.
Even trickier than counting up the missing tax revenue is figuring out what to do about it.
Canada has tax treaties and agreements with a growing number of key low-tax or no-tax jurisdictions — agreements backed up by domestic law that actually allows for Canadian firms to repatriate some types of income back to Canada without paying tax.
In the past few years, the federal government has tightened the screws.
- Like many other developed countries, Canada now imposes a global minimum tax of 15 per cent, mainly touching large companies with foreign subsidiaries. The Department of Finance sees collecting an extra $2.1 billion a year this way.
- Ottawa has now curtailed the deduction of excessive interest and expenses, expecting to raise between $1.6 billion and $1.8 billion a year.
- The government has significantly boosted CRA’s budget for audits and has also updated its anti-avoidance rules that apply to corporations.
- In the last budget, the federal government bolstered its authority over transfer pricing that companies use to account for in-house international trade.
Officials believe their measures are chipping away successfully at the tax avoidance problem, delivering results.
Critics and parliamentarians of all stripes want more though — with good reason. But there are no magic solutions.
The approach of the past has often been to add more rules and complexities, but there’s a chance that amounts to a road map for dodgy activity. The same issues apply to multilateral agreements and tax treaties.
If the entities you’re trying to stymie specialize in hiding behind complexity, adding even more complexity may make things worse. Simpler rules, on the other hand, could help.
The other main approach is transparency. Europe and Australia are legislating public country-by-country reporting (PCBCR), which requires multinational corporations to make public key financial data in every country they operate.
Canada has some requirements along these lines but the information is not public.
The hope is that transparency will dampen tax avoidance.
“PCBCR really is sunlight as the best disinfectant. It would allow academics and researchers outside of the tax authorities to engage in the kind of research that we need to deal with this whack-a-mole problem,” D.T. Cochrane, senior economist at the Canadian Labour Congress, told the committee.
“There will always be incentive to create these schemes. We need more methods of confronting them.”
A balancing act indeed.
Show Me the Money: Tax, Infrastructure and Who Pays?
Taxes shape more than government revenue. They shape trust. In this episode of “Canada’s Economy, Explained”, host Marwa Abdou sits down with the Canadian Tax Observatory’s Heather Scoffield to unpack the federal budget and explore how Canada’s tax and fiscal systems influence the country’s ability to build, grow and compete.
With Marwa Abdou & Heather Scoffield | Canada’s Economy, Explained Podcast
Mistrust of the CRA leaves low-income Canadians missing out on benefits
By Heather Scoffield | The Toronto Star
PM Mark Carney says he wants to issue pre-filled tax forms for those in “simple” tax situations.
But “simple” is in the eye of the beholder. In financial terms, “simple” can mean you probably don’t have intricate investments. You likely don’t owe the government money. Nor do you draw your income from multiple sources.
In socio-economic terms, however, life for low-income taxpayers who are reluctant to fill out forms for the Canada Revenue Agency is anything but simple. And if the CRA wants its new proposals to work, it will need to address that complexity head-on.
Thank you for the input – Prosper Canada, Elizabeth Mulholland, Lisa Rae, Kaite Burkholder Harris, Alliance to End Homelessness Ottawa, Rebekah Smylie, West Neighbourhood House.
In socio-economic terms, life for low-income taxpayers who are reluctant to fill out forms for the Canada Revenue Agency is anything but simple. And if the CRA wants its new proposals to work, it will need to address that complexity head-on.
