Personal Income Tax

• Income tax is based on basic personal credits, applicable provincial credits, and typical major deductions at each income level. Quebec residents pay federal income tax less an abatement of 16.5 per cent of basic federal tax. This abatement has been used to reduce Quebec provincial tax rather than federal tax, for comparative purposes. The two income family of four with $55,000 annual income is assumed to have one spouse earning $35,000 and the other $20,000, the family with $90,000 income is assumed to have one spouse earning $50,000 and the other $40,000, the family with $30,000 is assumed to have each spouse earning $15,000 and each senior is assumed to receive $15,000. All representative families are assumed to have employment income except the senior couple. Contributions to the Quebec Health Services Fund are included in Quebec personal income tax. Provincial income tax is calculated based on the assumption that all provinces except Quebec parallel the federal tax reductions for 2000.

Net Child Benefits

• Net child benefits are provincial measures affecting payments to families with children. Provincial child benefit measures are available in British Columbia (BC Family Bonus), Alberta (Family Employment Credit), Saskatchewan (Child Benefit), Quebec (Integrated Child Allowance), New Brunswick (Child Tax Benefit) and Nova Scotia (Child Benefit). In addition, the Alberta government has chosen to vary the amount of the basic federal child tax benefit that their residents receive (shown as a net amount).

Property Tax

• Property tax estimates prepared by the Canadian Mortgage and Housing Corporation (CMHC) have been used. The estimates are from a 1998 CMHC report of property tax estimates for a "starter home" in major Canadian cities. These estimates are based on a comprehensive review of property taxes that prospective buyers are likely to pay in major cities in each province. Property tax estimates for 1999 are not available from CMHC. In the tables, each family is assumed to own a dwelling with property taxes assessed at the amount provided by the CMHC report (except the single individual with $25,000 annual income who is assumed to rent accommodation). Net property taxes are estimated as taxes owing after credits provided through the property tax system are subtracted.

Sales and Fuel Tax Estimates

• Includes sales tax on meals, liquor and accommodation. Estimates are based on expenditure patterns from the 1996 Survey of Family Expenditures. In estimating individual and family taxable consumption, disposable income is reduced by 20 per cent to reflect housing (mortgage and property taxes or rent) costs. The senior couple is assumed to own their home and have no mortgage costs. For each province, disposable income is further reduced by estimated federal income taxes, estimated provincial income taxes and health care premiums if applicable. In addition, the single individual with $80,000 annual income and the family with $90,000 annual income are assumed to have savings equal to 5 per cent of their disposable income. For each family, disposable income is distributed among expenditures using the consumption pattern of a typical family with the relevant characteristics as estimated by the family expenditure survey. The provincial sales tax and the federal goods and services tax (GST) components of these expenditures are then calculated. GST estimates have been reduced by the GST credit, where applicable.
• Fuel tax is based on annual consumption: 1,000 litres of unleaded fuel for the single individual at $25,000, the family at $30,000 and the senior couple; others are assumed to consume 1,500 litres.

Health Care Premiums/Payroll Tax

• Health care premiums are levied in British Columbia and Alberta only. Approximately 50 per cent of British Columbia premiums are paid by employers on behalf of their employees with the remainder paid by individuals, either by employees or by residents who are not employed. Payroll taxes, in the four provinces that levy them, are paid by the employer. The cost to employers of payroll taxes and health care premiums paid on behalf of employees is generally reflected in reduced wages.

Effective Tax Rates

• British Columbia taxes have been calculated using rates in effect for 2000. Taxes for other provinces were calculated using rates that were announced prior to March 17, 2000, and come into effect during 2000.