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Canada has one of the largest and fastest growing free-market economies in the industrialised world. Over and above the effects of the 2008-09 global recession, Canada’s GDP grew more in line with that of the USA, narrowing the historic gap with its more industrialised neighbour”. Service industries now employ three out of four Canadians and generate two thirds of the GDP. More and more, Canadians work in offices, stores or warehouses rather than farms, mines, mills or factories. Canada’s economic well-being is tied to many factors: the wealth of natural resources; the strength of its manufacturing and construction industries; the health of the financial & service sectors; the ability to span distances using communications and transportation technologies; dynamic trade relationships with other nations; and the ability to compete in a global marketplace. Advances in technology, the increased globalisation of markets and the emergence of liberal trading regimes are fundamentally changing the way Canada conducts business. Long removed from an economy based almost exclusively on natural resources, Canada is rapidly moving toward a knowledge-based economy built on innovation and technology. Canada actively participates in international trading and through the North American Free Trade Agreement (NAFTA) Canada is a vital part of the huge integrated North American market of almost 400 million consumers. As such the United States is Canada's largest trading partner, accounting for more than 80% of exports. Canada also enjoys trading relationships with many other countries, due to strong historical ties with Europe and access to Asian economies. Taxation To support a generous health and social security service, Canadians have to pay high income taxes. Income tax includes Federal and Provincial taxes, of which a certain percentage is first paid to the Federal government and then a percentage of that to the Provincial government. Canada has a graded system of income tax, with four levels of Federal tax (based on annually changing income levels). Provincial taxes vary greatly between the provinces, for example, Alberta has a flat 10% provincial tax on income, whereas British Columbia has five levels of provincial income tax. The average home owning Canadian family can pay up to 44% of its annual income in taxes. These include a variety of taxes such as income tax, sales tax, property tax, automobile, social security, and medical taxes. Local taxes include property taxes based on the value of your property and are used to fund public schools, the local police and other services. The Excise Tax Act (the ETA) imposes the goods and services tax/harmonized sales tax (GST/HST) on most goods and services consumed in Canada, at the rate of 5%, and in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland & Labrador, at the rate of 13%.  |
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Economy