Canadians spend half their income on taxes, says study

In 2023, the average Canadian family of two or more people will pay $64,610 in total taxes, representing 46.1% of their annual gross income ($140,106).

Canadians spend half their income on taxes, says study
The Canadian Press / Adrian Wyld
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As of June 19, every dollar Canadians earn this year represents a dollar not pocketed by grubby government bureaucrats.

"If Canadians paid all their taxes up front, they would work the first 169 days of this year before bringing any money home for themselves and their families," said Jake Fuss, associate director of fiscal studies at the Fraser Institute.

In 2023, the average Canadian family of two or more people will pay $64,610 in total taxes, representing 46.1% of their annual gross income ($140,106). Last year, the average family paid 45.2% of its income to the government.

The tax burden compromises more than five months of income — from January 1 to June 18. On June 19, — otherwise known as “Tax Freedom Day” — Canadians start working for themselves.

According to the Fraser Institute, Tax Freedom Day measures the total annual tax burden imposed on Canadian families by federal, provincial and municipal governments. They encompass income taxes, payroll taxes (including the Canada Pension Plan), health taxes, sales taxes (like the GST), property taxes, fuel taxes, carbon taxes, “sin” taxes and more.

This year, it comes eight days later than in 2019, the last year before the pandemic, and four days later than 2021, when it fell on June 15.

According to the Canadian Taxpayers Federation (CTF), Canadians will see 'significant tax changes' in 2023. Their “New Year's Tax Changes” report outlined higher CPP and EI premiums by hundreds of dollars, $445 more in carbon taxes — a second carbon tax — and a 6.3% tax increase on booze.

“Tax hikes will give Canadians a hangover in the new year,” CTF federal director, Franco Terrazzano, told Rebel News. “Canadians can't afford gas or groceries, and the government is making things worse by hiking taxes.”

“Canadians pay too much tax because politicians waste too much money. The government needs to provide relief by trimming the fat and cutting taxes.”

A Leger poll posted earlier this year found over half (52%) of Canadians believe the average family should pay 25% or less of their income to the government. Four in every five support paying the government less than 40% of their income.

According to Statistics Canada, most workers have seen their purchasing power decline in recent years.

“Wages and earnings have not kept pace with price pressures, especially those related to food and shelter,” said a StatsCan report Research To Insights: Consumer Price Inflation, Recent Trends And Analysis

Though weekly earnings typically increased 4.2% last year, rent increased 5.9% over the same period. 

“Despite moderate increases in wages and earnings, most workers have seen their purchasing power decline as inflationary pressures ramp up,” wrote analysts.

The cost of running a family car rose 13.4%, food prices increased 14.8% and mortgage interest costs jumped 18%.

“Increases in the cost of living are [harming] net saving and wealth, especially for more vulnerable households,” disproportionately impacting low and middle-income households.

StatsCan said young adults expressed the most concern over finances, with almost half of those aged 35 to 44 having difficulty meeting their financial needs last year.

The Financial Consumer Agency found that 38% of Canadians borrow money to meet monthly expenses. 

“More are borrowing money to cover their day-to-day expenses, including high-cost loans,” said an Agency report, Consumer Vulnerability: Evidence From The Monthly Covid-19 Financial Well-Being Survey.

“The percentage of Canadians who borrowed money to cover daily expenses increased from 26% in 2020 to 38% in September 2022,” said Consumer Vulnerability. Other findings from monthly questionnaires showed 48% of Canadians used their savings to meet monthly expenses, while 25% routinely spent more than they earned each month.

Forty percent of Canadians surveyed said they were “just getting by financially,” while 41% worried they had no money to cover unexpected expenses like car repairs.

Ultimately, three-quarters (74%) believe a family of two or more people is over-taxed by all levels of government.

“There is a large discrepancy between what the average family pays in total taxes versus what Canadians believe the average family should be paying,” said Fuss. “It's clear that many Canadian families don't believe they're getting value from their taxes.”

Leger said nearly half (44%) of Canadians believe they're getting poor or very poor value from government services.

“Tax relief should be a much higher policy priority given the overwhelming view that average Canadian families are overtaxed coupled with the weak support for the value Canadians receive in government-provided services,” added Fuss.

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  • By Tamara Ugolini

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