Costs are soaring for Canadians. The price of the essentials, like food, shelter, and clothing, just keep going up. The economy is struggling. Canada faces a youth unemployment crisis. And yet, at the very same time, Canadians’ tax burden has never been higher.
According to the Fraser Institute, the average Canadian family now spends far more on income taxes alone than essentials like food, shelter, and clothing. The margin of comparison is 42.3 per cent of all household income going toward taxes compared to 33.5 per cent going toward food, shelter, and clothing.
What makes up the average Canadian family’s income tax bill? The biggest portion is income taxes, which represents 31.2 per cent. That’s followed by payroll and health taxes at 21.4 per cent, sales taxes at 14.1 per cent, profit taxes at 13.5 per cent, and property taxes at 8.5 per cent. Other taxes, including import duties and sin taxes, round out the list.
The average family in Canada, according to the Fraser Institute, brings in $114,289 of cash income, but sees $48,306 go toward taxes.
Add up the cost of taxes with the cost of essentials, and the average family is spending more than three out of every four dollars brought in on either taxes or food, shelter, and clothing. That leaves very little left at the end of the day for families to spend money on things they want to spend money on, like entertainment, transportation, or vacations.
Canadians are living in a reality where government takes far too much. The idea that for the average family, let alone high income earners, more than four out of every 10 dollars earned goes right to the government simply isn’t right. Canadians shouldn’t have to work from January to June every year for the government before they finally get to work for themselves.
When tax burdens are too high, Canadians are discouraged from earning more and innovating, armed with the knowledge that the more they earn, the more they’ll send to the government in taxes.
It’s also worth asking whether Canadians feel they’re actually getting any bang for their buck. Government services are slow and unresponsive. Infrastructure projects consistently run behind schedule. Healthcare wait times are horrendous. And yet Canadians are being forced to hand over more than 42 per cent of their income to the taxman.
This Fraser Institute study shows that it’s time for change. The tax burden must decrease. And yet, at the same time, governments at the federal and provincial levels are running large deficits, spending far more than they bring in. Significant tax relief in these circumstances is unlikely. Until our governments get their fiscal houses in order, the tax burden on Canadians is likely to be prohibitive.
That’s why Canadians must demand a fiscal reckoning. Taxpayers are paying too much, and governments are living far too large. It’s time for a return to the Chrétien consensus that balanced budgets do matter. It’s not just so that we don’t keep taking on more debt that gets passed down to our children and grandchildren, although that is important. It’s also to ensure that there’s fiscal room to reduce Canadians’ ridiculously high tax burden.
As the price of essentials continues to go up and economic uncertainty due to trade tensions remain, it’s never been more important to lower Canadians’ tax burden and get our governments’ fiscal houses in order.
It’s time for Canadians to demand better of our political leaders. No more debt and deficits. No more passing the buck. And it’s time to start talking about getting Canadians’ ridiculously high tax burden going in the right direction, which is down, not up.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
