44% Of Income Pays Taxes

The average Canadian family spends nearly half its total income on taxes, more than it spends on food, clothing, and shelter, according to a new study from independent research organization the Fraser Institute.

The Canadian Consumer Tax Index 2009 shows that even though the income of the average Canadian family has increased significantly since 1961, their total tax bill has increased at a much higher rate.

• In 2008, the average Canadian family earned an income of $71,764 and paid total taxes equaling $31,535—43.9 per cent of its income.
• In 1961, the average Canadian family earned an income of $5,000 and paid $1,675 in total taxes—33.5 per cent of its income.

“Canadian families have seen their total tax bill increase by an astounding 1,783 per cent over the past 47 years,” said Niels Veldhuis, the study’s co-author and the Institute’s director of fiscal studies.

“The tax burden faced by Canadians extends well beyond income tax. When you add up all the taxes Canadians pay to all levels of government, the typical family is sending more of its income to government than it spends on basic necessities such as food, clothing, and housing,”

The Canadian Consumer Tax Index calculates the total tax bill of the typical Canadian family by adding up the various taxes that the family pays to federal, provincial, and local governments. These include direct taxes such as income taxes, sales taxes, Employment Insurance and Canadian Pension Plan contributions, as well as “hidden” taxes such as import duties, excise taxes on tobacco and alcohol, amusement taxes, and gas taxes.

“At this time of year, most Canadians are focussed on filing their income tax returns. But personal income taxes account for just 33 per cent of the total tax bill paid by the average Canadian family in 2008,” Veldhuis said.