VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 4, 2010) - Canadians will celebrate Tax Freedom Day on June 5 this year, three days later than 2009, according to the Fraser Institute's annual Tax Freedom Day calculations.
Tax Freedom Day is a clear and easy-to-understand representation of the amount of tax the average Canadian family must pay to all levels of government. If Canadians were required to pay all of their taxes up front, they would have to pay each and every dollar they earned to governments prior to Tax Freedom Day.
... A Later Tax Freedom Day
The reason Tax Freedom Day falls on June 5 in 2010, three days later than 2009, is primarily the result of Canada's improving economy as the country emerged from recession.
When the economy recovers and incomes increase, a family's tax burden tends to increase to a greater extent. That is mainly because household consumption increases, which results in an increase in the amount of sales and other consumption taxes paid by Canadian families.
However, Veldhuis points out that several provinces also increased taxes in 2010 which contributed to the later Tax Freedom Day.
For example, Quebec increased several taxes (such as gas and mining taxes) and introduced a new health tax in 2010; British Columbia increased its health tax (Medical Services Plan premiums); Saskatchewan increased tobacco and alcohol taxes; Manitoba increased tobacco taxes; and Nova Scotia increased income taxes and its sales tax rate.
In 2010, the average Canadian family (with two or more individuals) will earn $92,754 (which includes not just wages and salaries, but interest, dividends, private and government pension payments, old age pension payments, and other transfers from governments) and pay a total of $39,141 in taxes, for a total tax bill amounting to 42.2 per cent of its income.
The total tax bill for the average Canadian family will increase by 3.8 per cent ($1,441) between 2009 and 2010. By comparison, income for the average Canadian family will increase by just 2.0 per cent ($1,816).
The largest increase among the myriad of taxes came in the form of income taxes, which increased $634 for the average Canadian family while sales taxes jumped by $378.
"Canadians pay a litany of taxes including income taxes, sales taxes, property taxes, health taxes, social security taxes, gas taxes, and many more," Veldhuis said.
"It is nearly impossible for an ordinary citizen to have a clear idea of how much tax they really pay. Tax Freedom Day gives Canadians a true picture of their total tax burden."
For more information, please contact
The Fraser Institute - Media Contact, Niels Veldhuis
Vice President, Research