Happy Tax Freedom Day

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Tax Freedom Day for the average Canadian family falls on June 10 this year—one day later than in 2014, according to the Fraser Institute’s annual calculations.

Tax Freedom Day measures the total yearly tax burden imposed on Canadian families by the federal, provincial and local governments.

“Without our Tax Freedom Day calculations, it’s nearly impossible for Canadian families to know all the taxes they pay each year because federal, provincial and local governments levy such a wide range of taxes,” said Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of Canadians Celebrate Tax Freedom Day on June 10, 2015.

The list of taxes includes income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, vehicle taxes, profit taxes, import taxes, “sin” taxes and more.

In 2015, the average Canadian family (with two or more people) will pay $44,980 in total taxes or 43.7 per cent of its annual income.

On the calendar, those numbers represent more than five months of income—from January 1 to June 9. It’s not until June 10—Tax Freedom Day—when families start working for themselves, not the government. The heavier the tax burden, the later the Tax Freedom Day.

So why does this year’s Tax Freedom Day come one day later than last year?

Because the average Canadian family’s total tax bill will increase at a faster rate (3.1 per cent) than the growth in income (2.1 per cent).

“Governments across Canada are partly to blame for the increased tax burden because many have raised taxes again this year,” Lammam said.

The $1,353 net increase in the average Canadian family’s total tax bill this year includes increases in income taxes ($927), payroll and health taxes ($312), sales taxes ($195) and auto, fuel and motor vehicle taxes ($55), among others.

This year’s later Tax Freedom Day continues a trend of delays that began in 2009 when it fell on June 3.

“With a rising overall tax burden, household budgets get squeezed, limiting the amount of income families have to spend, save or pay down household debt,” Lammam said.

But the tax burden doesn’t end there. When governments spend beyond their means, they borrow, incurring deficits, which are essentially deferred taxes. In 2015, seven provincial governments (including Ontario) expect to run budget deficits amounting to $18.2 billion.

“According to our calculations, Tax Freedom Day would come four days later this year if Canadian governments raised taxes even more to cover current spending instead of borrowing to pay for it,” Lammam said.

Calculate your personal Tax Freedom Day using the Fraser Institute’s online calculator.

Check out our short Tax Freedom Day video on the Fraser Institute’s YouTube channel, and this interactive infographic.

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