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goldstein: average canuck paying more in taxes than on necessities, report says
the average canadian family last year spent more of its...
jul 30 2024
3 minute read
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the average canadian family last year spent more of its income on all forms of taxation (43%) than on basic necessities, such as food, shelter and clothing combined (35.6%), according to a new report by the fraser institute.
for an average household with an income of $109,235, which includes families and unattached individuals, that amounted to a total tax bill of $46,988 in 2023, compared to a total of $38,930 for shelter ($23,809), food ($12,607) and clothing ($2,514).
the study by the fiscally conservative think-tank said the total tax bill paid by canadians has increased by 2,705% since 1961, faster than the increase in incomes (2,085%), shelter (2,006%), food (901%), clothing (478%) and the consumer price index (901%).
if the combined deficits of federal and provincial governments are treated as deferred taxation, the study said, the total tax bill faced by the average household in 2023 increased by 2,852% compared to 1961.
the study noted that while the average family spent 56.5% of its income on food, shelter and clothing and 33.5% on taxes in 1961, the situation today has been reversed with families spending more of their income on taxes (43%) compared to necessities (35.6%).
adjusted for inflation, the total tax bill in 2023 dollars has increased by 180.3% since 1961, according to the study taxes versus the necessities of life: the canadian consumer tax index 2024 edition by jake fuss and callum macleod.
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the study defines the total tax bill paid by canadians as the combination of federal and provincial income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel and carbon taxes, vehicle taxes, natural resource taxes, import taxes and alcohol and tobacco taxes, along with other forms of taxation.
the annual study by the fraser institute reminds us that the total amount of taxation canadians pay goes far beyond income taxes and that affordability isn’t just about the rising cost of living, as evidenced by inflation and the increasing costs of housing, food and shelter.
it’s also about the amount of after-tax income canadians have to be able to put a down payment on a house or condo or pay the interest on their mortgage, or rent an apartment, or put food on the table, or buy winter clothing for their children or pay for the gasoline in the truck they need to earn a livelihood.
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with average families paying 43% of their income on taxes, it’s not surprising 46% of canadians recently said they were living paycheque to paycheque (leger poll, may 24-26, 1,620 adult canadians).
it also explains why it takes, according to another annual report by the fraser institute on tax freedom day, five to six months annually, depending on what province they live in, for the average family to pay their total tax bill before they start earning money for themselves.
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that said, it’s also true that taxes pay for a much wider range of public services today compared to 1961, including health care, and are partly returned to canadians in the form of entitlement programs, such as employment insurance, the canada pension plan and old age security.
critics of how the fraser institute makes its calculations say its use of average incomes instead of median family incomes inflates the amount of money families pay in taxes, that it includes taxes paid by businesses as if they were paid by families and fails to calculate the benefits taxpayers receive from hospitals, schools and other public infrastructure.
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