TAXATION IN CANADA

When Canada became independent in 1867 the British North America Act attempted to create a centralized federal government with unlimited revenue gathering abilities. The federal government was entrusted with the high cost programs, most notably defence and the building of railways. The provinces were given limited taxation power; they could only impose direct taxes such as sales and income tax. They were given responsibilities that were meant to be cheaper such as health care and education.

For the early part of Canadian history most federal government revenue came from tariffs on trade with excise taxes making up the rest of the government’s funding. The largest source of provincial funding was license permits and transfers of funds from the federal government. The first corporate taxes were introduced at the end of the nineteenth century.

This resulted in a crisis during the Great Depression. The provincial governments were responsible for the skyrocketing welfare costs, but they could not raise enough taxes, especially since the taxes permitted the provinces were so dependent on the health of economy. The federal government still had plenty of money, however. This resulted in the system of transfer payments between two levels of government that continues to this day.

The First World War had mostly been financed by traditional means, but the Second World War led to a dramatic change in the tax system. The percentage of Canadian government revenue from indirect taxes fell from 90% in 1913 to less than 40% by 1946. Instead Canadians began to pay income taxes and direct taxes have since provided the greatest bulk of government funding.

Nowadays Canada’s taxation rate is about average among OECD countries, but it is significantly higher than the rate in the United States, the country with which Canada usually compares itself. In total, about 36.8% of Canada’s GDP goes to taxes. And today about over 70% of government income comes from taxation, the rest from tariffs, fees and investments.

Income taxes (over 40% of tax revenue) are the most significant sources of revenue for the federal and provincial governments. Income taxes throughout Canada are progressive, with the wealthy paying a higher percentage than the poor. But Canadian income taxes are still less progressive than those of many nations.

The federal government also imposes a 7% sales tax on most purchases known as the GST. Every province except for Alberta has a provincial sales tax of some sort.

The municipal level of government is funded largely by property taxes on both residential and commercial properties. These account for about 10% of total taxation in Canada.

Both the federal and provincial governments impose hefty excise taxes on inelastic goods such as cigarettes, gasoline and alcohol. A great bulk of the costs of these items in Canada is taxes.

A levy for the Employment Insurance system and the Canada Pension Plan is paid by every worker and these along with smaller services like workers’ compensation account for 12% of government taxes.

Also companies and corporations in Canada pay tax on profit income and on capital gains. These make up a relatively small portion of total tax revenue. A withholding tax is levied on dividends paid – this is a tax credit to the account of the dividend recipient.

Vocabulary

 

1.	to attempt	делать попытку, стараться
2.	to entrust (with)	вверять; возлагать, поручать
3.	tariff (n)	тариф; налог, пошлина
4.	funding (n)	субсидирование, финансирование
5.	license (permits)	разрешение; лицензия
6.	transfer of funds	перевод (денежных) средств
7.	to result (in)	кончаться, иметь результатом
8.	Great Depression	Великая депрессия (крупнейший экономический кризис, охвативший США, начиная с 1929 и сопровождавшийся резким падением промышленного производства и цен на с/х продукцию широкой волной финансовых банкротств и колоссальным ростом безработицы)
9.	to sky-rocket	вызвать резкое повышение, стремительный рост; подниматься резко, подскакивать (о ценах)
10.	welfare (n)	социальное обеспечение
11.	transfer payments	трансфертные платежи (выплаты населению по программам социального страхования и платежи процентов владельцам гос. обязательств)
12.	means (n., pl.)	способ, средство
13.	to provide	обеспечивать
14.	bulk (n)	основная масса, большая часть чего-л.
15.	OECD (Organization for Economic Cooperation and development)	организация экономического сотрудничества и развития
16.	GDP(gross domestic product)	ВВП, валовой внутренний продукт
17.	tax revenue	гос. доходы от сбора налогов
18.	commercial property	коммерческая недвижимость, собственность (объекты нежилой недвижимости, которые могут приносить доход и предназначены для деловых целей (офисные здания, рестораны, гостиницы, магазины, склады и т.п.)
19.	to account for	отвечать; нести ответственность за что-л.
20.	hefty (adj.)	большой, объемистый
21.	levy (n)	сбор, взимание (пошлин, налогов)
22.	Canada Pension Plan	Канадская пенсионная программа (негосударственная пенсионная программа, финансируемая за счет взносов работников, работодателей и самозанятых; дополняет государственную Пенсионную программу)
23.	workers’ compensation	пособие по нетрудоспособности

 

Exercise 2

Find the most suitable Russian equivalents to the following English collocations:

To be entrusted with the high cost programs, most notably defence and the building of railways; responsibilities that were meant to be cheaper such as health care and education; the taxes permitted the provinces were so dependent on the health of economy; taxes are progressive, with the wealthy paying a higher percentage than the poor; to be funded largely by property taxes on both residential and commercial properties.

 

Exercise 3