The Fraser Institute

The Fraser Institute

June 13, 2008 06:00 ET

The Fraser Institute: Canadians Celebrate Tax Freedom Day on June 14th in 2008, Four Days Earlier Than 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 13, 2008) - Tax Freedom Day, the day Canadians have paid off the total tax bill imposed on them by government and can finally start working for themselves, arrives on June 14th, four days earlier than in 2007, according to The Fraser Institute's annual Tax Freedom Day calculations.

"Canadians spend almost half the year working to pay all the various taxes levied on them by federal, provincial and local governments. Every dollar they earn before June 14 would be required to pay the taxes owing to all levels of government," said Niels Veldhuis, The Fraser Institute's Director of Fiscal Studies.

The taxes used to compute Tax Freedom Day include income taxes, property taxes, sales taxes, profit taxes, health, social security and employment taxes, import duties, license fees, taxes on the consumption of alcohol and tobacco, natural resource fees, fuel taxes, hospital taxes and a host of other levies.

"Given the number of different taxes imposed on Canadians, it is virtually impossible to know exactly how much tax we pay. The point of Tax Freedom Day is to give people a comprehensive and easy-to-understand indicator of the total amount of taxes paid to all three levels of government."

An Earlier Tax Freedom Day

This year Tax Freedom Day falls four days earlier than in 2007. The latest Tax Freedom Day in Canadian history was in 2005, when it fell on June 25. Tax Freedom Day moved forward to June 23 in 2006 and June 18 in 2007.

"Even with the recent improvements, Tax Freedom day still falls 40 days later than in 1961, the earliest year for which we have calculations," Veldhuis said.

There are several reasons why Tax Freedom Day comes earlier in 2008. The federal government's reduction in the Goods and Services Tax (GST) to five per cent from six per cent, which took effect on January 1, 2008, moved Tax Freedom Day up by two days.

Many provincial governments also reduced taxes in 2008. For example, Saskatchewan reduced its corporate income taxes; Manitoba cut its middle personal income tax rate, corporate income tax and small business rates; and Newfoundland reduced personal income taxes. Additionally, 2008 was a leap year, which effectively moves Tax Freedom day up by one day.

But Veldhuis cautions that an earlier Tax Freedom Day can also be generated by cautious revenue projections on the part of Canadian governments. Federal and provincial budget forecasts of how much revenue they will collect are one of the key components of the Tax Freedom Day calculations. Low projections for tax revenue, especially relative to projected increases in personal incomes, can result in Tax Freedom Day appearing to fall earlier in the year.

Tax Freedom Day Among the Provinces

Tax Freedom Day varies from province to province, depending on the taxation levels of provincial and local governments. Alberta enjoys the earliest Tax Freedom Day on May 28, followed by New Brunswick on June 3 and Prince Edward Island on June 4. Next comes Manitoba (June 8), followed by Ontario (June 9), Nova Scotia (June 12), British Columbia (June 13), and Quebec (June 19). Saskatchewan has the second-latest Tax Freedom Day (June 20) with Newfoundland and Labrador waiting the longest, until June 30.

The Atlantic Provinces historically have had some of the country's earliest Tax Freedom Days in part because a large share of their total revenue is transferred from other provinces through the federal government's equalization payments. Tax Freedom Day in those provinces, as well as in Manitoba and Quebec, comes earlier than it would without these transfers. On the other hand, Tax Freedom Days in the traditional 'have' provinces of Ontario, Alberta, and British Columbia come later than would be the case without these transfers.

All Canadian provinces saw Tax Freedom Day arrive earlier in 2008 than in 2007 with the greatest improvements coming in Manitoba (seven days), and Saskatchewan and British Columbia (six days).

There is also an ongoing question as to whether natural resource royalties are actually a tax or simply the conversion of an asset (natural resources such as oil and gas) into an income stream for the province. If natural resource revenues are excluded, Tax Freedom Day is 27 days earlier in Newfoundland and Labrador, 12 days earlier in Alberta, 11 days earlier in Saskatchewan and five days earlier in British Columbia.

Total Tax Bill Has Increased

In 2008, the average Canadian family (with two or more individuals) will earn $90,678 and pay a total of $40,667 in taxes, for a total tax bill amounting to 44.8 per cent of its income.

Income for the average Canadian family will increase by 2.8 per cent ($2,501) between 2007 and 2008 while the total tax bill increases 0.6 per cent ($223). The largest increase among the myriad of taxes comes in the form of income tax, up $365 for the average Canadian family.

Fairness in the Tax System

In addition to the size of the average family's tax bill, there are concerns about the fairness of the Canadian tax system. The top 30 per cent of income earners pay 66.6 per cent of all taxes and earn 59.7 per cent of all income, while the bottom 30 per cent of all income earners pay 4.7 per cent of all taxes and earn 9.1 per cent of all income. The overall distribution shows that Canada's tax system is effectively progressive and does extract proportionately more money from those on the higher end of the income scale.

Canadians can calculate their personal Tax Freedom Day using The Fraser Institute's Personal Tax Freedom Day Calculator at The report, Canadians Celebrate Tax Freedom Day on June 14, is also available at

The Fraser Institute is an independent research and educational organization with offices in Calgary, Montreal, Toronto, and Vancouver. 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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