The Carney government’s recent efforts to make Canadian taxes more competitive have not yet put any significant dents internationally, a new study released Monday has found, putting further pressure on Ottawa to take significant steps in the federal budget that is expected in less than a month.
The annual study, by The Tax Foundation’s Center for Global Tax Policy, gave Canada an overall rank of 15th among 38 industrialized countries — the same as last year but slightly ahead of the United States.
Canada’s score, and its economy, were dragged down largely by high personal income taxes, which ranked 28th overall among Organisation for Economic Co-operation and Development (OECD) countries. Canada ranked 22nd in direct taxation on wages and salaries and 34th on income from capital gains and dividends.
But the national grade was much better on consumption taxes, with Canada placing 8th, despite the national disdain for the GST and its provincial counterparts. The report, titled the 2026 International Tax Competitiveness Index Rankings, also noted that Canada, unlike many countries, does not apply wealth, estate or inheritance taxes.
Not surprisingly, after more than a year of a trade war with the United States, Canada was given a poor grade (28th) in its cross-border tax regime.
The study noted that Canada has taken some steps to make its tax regime more competitive, but that other countries are doing the same. Many countries, the report noted, are trying to rely more on sales and payroll taxes, which are less harmful economically, while cutting corporate and personal income taxes.
“A well-structured tax code is easy for taxpayers to comply with and can promote economic development,” the report says. “In contrast, poorly structured tax systems can be costly, distort economic decision-making, and harm domestic economies.
After a decade of waning competitiveness under former prime minister Justin Trudeau, the Carney government has made it a priority to try to turn Canada’s economic performance around and part of the strategy has been to lower taxes. Ottawa has eliminated the consumer portion of the carbon tax, cut the GST on first-time homebuyers, eliminated the digital services tax cancelled the planned increase in the capital gains inclusion rate and made a tepid cut to personal income taxes.
Ottawa also took a big swing at improved competitiveness last month when it introduced the Building Canada Strong Act, designed to speed up infrastructure projects, improve trade and transportation links and amend labour rules in federally regulated sectors to try to avoid strikes and other work stoppages.
New data released Monday by Statistics Canada shows the consumer price index (CPI) increased 3.1% year over year last month, up from 3% in August.
That, the data says, is largely due to high gasoline prices, which were up 27.8% from this time last year.
August saw a 22.8% increase in gas prices with September's annual transition to winter gasoline blends moderating prices.
"Prices for energy accelerated in September, rising 19% year over year following a 15.4% gain in August," says the StatCan report.
"Crude oil prices increased in September, reaching their highest level since May amid ongoing uncertainty about the wars in the Middle East, resulting in higher prices for gasoline and fuel oil."
In July, 14,245 Canadians were employed in the industry, according to data released by Statistics Canada, compared with an industry high of 28,859 in January 2003.
That represents a loss of more than 14,600 jobs, or just over 50%, over the past 23 years.
The latest figures were released Sept. 24, weeks before Stelco idled its cold-rolled and coated steel lines in Hamilton.
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The real reason why the European Carney doesn't want Alberta to go:
The Canada Pension Plan invested billions in Alberta prior to today’s referendum that asks residents if they’d pursue independence. Holdings total $9.5 billion according to filings, mainly in energy stocks: “Should Alberta remain a province of Canada?”
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