Rich Pay Bigger Share

Worth A Look, Taxation, Frontier Centre

Canada’s top earners paid a greater share of the federal income tax pie in 2002 than 1990, Statistics Canada said Friday.

The government agency found that the 10 per cent of Canadian tax filers in the highest income bracket paid 52.6 per cent of the total federal personal income tax in 2002, up from 46 per cent in 1990.

Statistics Canada conducted the study by dividing tax filers into three groups: the 10 per cent with the highest incomes, the 50 per cent with the lowest incomes, and the remaining 40 per cent who are called intermediate-income earners.

Statscan attributed the increase among high earners to a smaller drop in the effective tax rate than that of the other two groups of tax filers, combined with an increase in their share of total income.

At the other end of the spectrum, the half of tax filers with the lowest incomes saw their share of the tax load fall in the same period. In 2002, they accounted for 4.4 per cent of personal income tax paid, down from 6.7 per cent twelve years earlier despite having higher incomes.

Intermediate-income earners were the biggest winners in terms of effective tax rate, Statscan said.

The report also found that Canadians’ total income grew faster than their federal personal income tax bill in the period. While federal tax increased 49.4 per cent, total income rose 63.8 per cent. Statscan attributed the gap to two years, 2001 and 2002, when total income continued to rise while federal tax revenue went down.

Overall, Canadians saw their effective federal tax rate, or the federal tax paid for each $100 of income, decline. In 2002, Canadians paid on average $11.18 of federal tax for each $100 of income. In 1990, they paid $12.25 for every $100, a decline of $1.07.