G: Tax Revenues Attributable to Airport Employers

Introduction

This appendix describes the employment and other assumptions on which tax revenue calculations are based. As well, the approaches used to estimate employer and employee contributions to local, provincial, and federal governments are presented. All estimates are for the 2019 calendar year, unless otherwise stated.

Some of the taxes pose conceptual questions about how much, or if any, tax revenue from a particular source should be attributed to firms serving YWG. These questions are highlighted and simplifying assumptions are put forth.

Employment at YWG

The majority of tax calculations in this report depend on direct employment and total wages. The total direct employment, in person years, used for these calculations is 10,020 person years. The total payroll is estimated at nearly $580 million.

Personal Income Tax (Federal and Provincial)

Employees who work for employers located at YWG are taxed on their income and, as a result, contribute to federal and provincial tax revenues.

Under the Income Tax Act federal income tax is paid on taxable income at a rate that increases with taxable income.

Estimation Method and Results

Provincial income tax was formerly calculated as a percentage of federal tax, but most provincial governments have begun collecting taxes on a sliding scale.

Because the tax rate is progressive, the tax paid by a group of employees depends on the distribution of income among those employees. Unfortunately, the distribution of income is not known, and average incomes must be used.

The average tax rates used are derived from the more detailed calculations of taxes payable shown in Figure G-2. In those calculations, assumptions have been made about income from non-employment sources, tax deductions from income (e.g., RPP and RRSP contributions), and tax credits applied against tax otherwise payable (e.g., CPP, EI, and charitable contributions). Average credits are calculated from Revenue Canada, General Income Tax Forms, 2019.

Each employee is assumed to pay tax as a single tax filer. Estimated income tax payable is $68.5 million in federal tax and about $53.9 million in provincial tax.

Figure G-2: Manitoba Single Tax Filer Income Tax Calculation – 2019

Corporate Income Tax (Federal and Provincial)

All corporations are liable to pay federal income tax under the Income Tax Act. The tax rate varies by type and size of company and by province. Provincial governments also levy a corporate income tax on any company having a permanent establishment in that province.

Government agencies are not subject to corporate income tax, nor are public authorities.

Estimation Method and Results

To calculate tax liability precisely is very difficult. It requires knowledge of the total tax base, and the proportion of the tax base attributable to the province. Therefore, an approximate method has been used.

In Manitoba, the federal corporate income tax collected per employee was $2,700 and the provincial corporate income tax collected per employee was $880 in 2018/2019.

Assuming all companies pay tax at the average rate per employee calculated above, the corporation income tax liability of the YWG employment sector is estimated to be $26.0 million toward federal revenues and $8.5 million toward provincial revenues. The estimated total corporate income tax revenue is roughly $34.5 million.

Employment Insurance Premiums

In 2019, employees in Canada paid employment insurance (EI) premiums equal to 1.62% of earnings up to a maximum of $860 per year. (Maximum insurable earnings are $53,100). Employers paid EI premiums equal to 1.4 times employee premiums.

Estimation Method and Results

The employee premium rate is applied to total payroll costs for employees earning less than $53,100 per year. The maximum contribution was used for employees earning more than $53,100 per year. Estimated employee payments were about $7.8 million in 2019.

The employer rate is applied to the employee payments. Estimated employer payments were about $10.9 million in 2019.

Canada Pension Plan Contributions

Tax Base and Rates

In 2019, employee contributions for the Canada Pension Plan (CPP) were 5.10% of pensionable earnings. Pensionable earnings are actual earnings less $3,500, to a maximum of $53,900. The maximum annual employee contribution is $2,748.90. The employer contribution is the same as the employee contribution.

Estimation Method and Results

The employee contribution rate is applied to average payroll for employees who are earning less than $53,900 a year. The maximum contribution was used for employment earning more than the maximum pensionable earnings.

Estimated employer and employee contributions are about $24.7 million each, for a total of $49.5 million.

Workers’ Compensation Board Contributions

Employers in each province are required to make contributions to the Workers’ Compensation Board to help offset the cost of on-the-job injuries. Employers are classified into industry groups. The contribution rate for each group is based on the injury costs associated with all companies in that group.^[1] The group contribution rate varies widely among industries and provinces. Some major companies are not included in the general “rateable” method of contribution but simply pay the actual cost of their claims plus an allowance for WCB administration costs. As it is not generally known which firms contribute in this manner, nor the value of their claims, an estimate based on reported payroll has been made for all firms.

It is possible that some companies are self-insured, and their payments could be viewed as a business expense rather than a tax. However, we have chosen to include their contribution because they are required to be part of this government-mandated program.

Estimation Method and Results

The contribution rates for each employment classification at YWG have been applied to the total payroll for that group, up to the maximum assessable earnings per worker of $127,000 in Manitoba in 2019. YWG employees paid an estimated $3.5 million to Worker’s Compensation in 2019.

Health Insurance Premiums

Tax Base and Rates

There are no Medical Services Plan (MSP) premiums for single filers in Manitoba.

Aviation Fuel Tax

The federal and provincial governments levy taxes on jet fuel. The aviation fuel tax rates are shown in Table G-3.

Table G-3: Fuel Tax Rates, 2019

Estimation Method and Results

The amount of aviation fuel sold at YWG in 2019 was approximately 181 million litres. The total aviation fuel tax revenues at YWG amount to approximately $13.0 million. Of this total, about $7.2 million went to the federal government and the government of Manitoba collected $5.8 million.

The fuel sold is also subject to the 5% GST rate payable to the federal government. With GST included, the total tax revenues from fuel sales at YWG amount to $19.1 million.

Property Taxes

Governments levy property taxes to help them finance local services. Property taxes paid by WAA amounted to $2.2 million in 2019. Tenants at the airport paid $5.3 million. In total, $7.5 million in property taxes were paid to the municipal government by the airport authority and its tenants.

Federal Ground Lease Payable in 2019

WAA also made federal ground lease payments to the Federal Government in 2019, amounting to $9.5 million.

• 1 Subject to Experience Rating Adjustment for individual companies.