The Fraser Institute

The Fraser Institute

April 16, 2007 06:00 ET

The Fraser Institute: Average Canadian Family Spending More Money on Taxes Than on Food, Clothing and Housing Combined

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 16, 2007) - The average Canadian family spends more money on taxes than on necessities of life such as food, clothing, and housing, according to a study from The Fraser Institute, an independent research organization with offices across Canada.

The Canadian Consumer Tax Index, 2007, 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 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.

- In 2006, the average Canadian family earned an income of $63,001 and paid total taxes equaling $28,311 -- 44.9 per cent of its income.

"The tax burden we face is made up of much more than just income tax. When you add up all the taxes we have to pay to all levels of government, the average Canadian family is paying more of its income to governments in the form of taxes than they spend feeding, clothing and housing themselves," said Niels Veldhuis, the study's co-author and Director of the Centre for Tax Studies with the Fraser Institute.

The Canadian Consumer Tax Index calculates the total tax bill of the average 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, and "hidden" taxes such as import duties, excise taxes on tobacco and alcohol, amusement taxes, and gas taxes.

"As Canadians grapple with the stress and anxiety of completing their income tax returns, any discussion of taxes naturally tends to focus on income taxes. But personal income taxes account for only 32 per cent of the total taxes the average Canadian family paid in 2006," Veldhuis added.

The Canadian Consumer Tax Index attempts to answer the question: How has the tax burden of the average family changed since 1961?

The study found the increase in the total tax bill means the average family now pays more money to various levels of government for taxes than it spends on food, clothing and housing combined.

In 1961, the average family had to spend 56.5 per cent of their cash income to obtain food, clothing and housing. In the same year, 33.5 per cent of the family's income went to governments as tax.

By 1981, the situation had been reversed; governments took 40.8 per cent of the income in the form of taxes, while the family used 40.5 per cent to buy food, clothing and housing.

By 2006, the average family was giving 44.9 per cent of its income to governments for taxes while using 35.6 per cent of its income to buy the necessities of life - food, clothing and housing.

Since 1961, the total tax bill for the average Canadian family has increased 1,590 per cent. By comparison, the cost of housing has increased 1,019 per cent, the cost of food 487 per cent and the cost of clothing has increased 447 per cent since 1961.

"Over the past 45 years, taxes have become the single largest expenditure in an average Canadian family's budget with the total tax bill for a typical family increasing by 1,590 per cent since 1961," Veldhuis said.

The Fraser Institute is an independent research and educational organization based in Canada. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

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