Provincial Tax

Once collected, the federal government distributes a percentage of the taxes back to the province, and this is how our tax system works.

Many of us understand that, as we pay our taxes, we reap some sort of social benefit. And as it stands, the taxes we pay to the federal government support certain services, but the taxes paid to the provincial branches also contribute to these same programs. In addition to these programs, each province has their own obligations to support their own infrastructures. And so, here is where issues arose. Because each province varies in size by land and population, many citizens find that there is an unbalance between the amount of revenue generated from each province. The solution to this, so to speak, was an equalization process where the provincial governments would contribute part of their funds to support those provinces that are unable to meet a certain level of revenue generated through taxation.

As Canadian citizens, since we pay taxes, it’s important to know where exactly these tax dollars are going, especially because when most of us think about our tax responsibilities, our minds immediately bring up the income tax. No one really enjoys seeing a portion of our earnings taken out on each paycheck, but it helps to remember that we pay taxes for the greater social benefits. It’s also important to remember that we all pay taxes on goods and services we buy and use as part of our daily lives (things such as groceries, property, and entertainment, to name a few). Understanding where our tax dollars are going towards and how they are distributed is vital to understanding why we pay taxes.

It is also equally as important to understand the reasons why people are upset with how the taxes are currently used and distributed. The main source of restlessness is due to how unbalanced the tax distribution seems to some. In other words, some feel that they do not receive enough or a fair share of the taxes, and this results in the outlook that taxpayers pay too much tax for not enough benefits or in the outlook that we pay too many unnecessary taxes.

At the end of the day, however, there is no getting around the fact that we must all support our ways of life by supporting our government and by paying our taxes. However, that isn’t to say that you cannot get tax breaks and deductions. Utilize the services of one of our professionals here at Ottawa Bookkeeping and we’ll help you diminish the amount you actually have to pay!