The Fraser Institute

The Fraser Institute

June 10, 2013 06:32 ET

The Fraser Institute: June 10 is Tax Freedom Day; Canadians Work an Extra Two Days in 2013 to Pay Their Total Tax Bill

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 10, 2013) - Tax Freedom Day, the day Canadian families have made enough money to pay off the total tax bill levied by all levels of government, falls on Monday, June 10 this year, according to the Fraser Institute's annual calculations.

Tax Freedom Day arrives two days later than 2012 when it fell on June 8.

"Canadians are waiting an extra two days to celebrate Tax Freedom Day partly because governments across the country continue to increase taxes in an effort to make up for their overspending and deficits," said Charles Lammam, Fraser Institute associate director of tax and budget policy and co-author of Canadians Celebrate Tax Freedom Day on June 10, 2013.

"What's worse, some governments are relying on the most damaging types of tax increases including higher tax rates on personal income and investment, which will ultimately discourage economic growth."

Among the tax increases announced so far are hikes to BC's corporate income tax and top personal tax rate as well as its Medical Services Plan premiums; a new top income tax bracket in Quebec; increases to Manitoba's Provincial Sales Tax and financial corporate capital tax; increases to New Brunswick's corporate income tax and all four personal income tax rates; increased taxes on small businesses in PEI; cancellation of a corporate tax decrease in Saskatchewan; and increased Employment Insurance premiums federally.

Tax Freedom Day also comes later this year because Canada's progressive tax system imposes a higher tax burden on families as their incomes increase.

Balanced Budget Tax Freedom Day

The report notes that Tax Freedom Day would arrive nine days later this year (on June 19) if the federal and provincial governments attempted to balance their budgets with additional tax increases.

"This year's deficits are not trivial. Canadian governments expect deficits to total $34.0 billion, with $18.7 billion coming from the federal government and $15.3 billion from the provinces. Since today's deficits must one day be paid for by taxes, Tax Freedom Day may come later in the future," Lammam said.

"Of particular concern is Ontario, Canada's largest province, with a deficit of $11.7 billion forecast this year. Tax Freedom Day would fall an astounding 14 days later on June 23 if the Ontario government raised taxes to cover its current deficit spending."

Your total tax bill

Tax Freedom Day is an easy-to-understand illustration of the total tax burden imposed on Canadian families by federal, provincial, and local governments. If Canadians had to pay all taxes up front, they would give governments each and every dollar they earned prior to Tax Freedom Day.

In 2013, the average Canadian family (consisting of two or more people) will earn $97,254 in income and pay a total of $42,400 in taxes (43.6 per cent of income). The taxes used to compute Tax Freedom Day include income taxes, payroll taxes (social security, pension, and health taxes), property taxes, sales taxes, profit taxes, import duties, fuel taxes, license fees, taxes on alcohol and tobacco, natural resource fees, and a host of other levies.

"It can be difficult for Canadians to decipher the myriad taxes they pay each year, especially the less visible ones like taxes imposed on profits, imports, and the consumption of fuel and alcohol. Our Tax Freedom Day calculations give families a complete picture of their total tax bill so they can judge whether taxes are at an acceptable level," Lammam said.

The report estimates that the average family's income will increase 2.3 per cent in 2013, while the total tax bill increases by much more (3.2 per cent). The largest tax increase for 2013 comes in the form of payroll taxes (including social security, pension, and health taxes) - up $483 for the average Canadian family. Other notable increases include those to income taxes ($455), sales taxes ($167), and property taxes ($83).

Canadians can calculate their personal Tax Freedom Day using the Fraser Institute's online calculator. A short video highlighting the array of taxes Canadians pay is also available at www.youtube.com/FraserInstitute.

Tax Freedom Day among the provinces

Tax Freedom Day varies from province to province, depending on the taxation levels of provincial and local governments. From earliest to latest:

  • Alberta (May 19)
  • British Columbia and Prince Edward Island (June 4)
  • Manitoba and New Brunswick (June 6)
  • Ontario (June 9)
  • Nova Scotia (June 10)
  • Saskatchewan (June 11)
  • Quebec (June 18)
  • Newfoundland and Labrador (June 22)

Compared to last year, Tax Freedom Day comes later in all provinces but Alberta and Newfoundland and Labrador. Manitoba has the longest delay, with Tax Freedom Day arriving four days later in 2013, driven in part by its looming PST hike.

To calculate average family income, the report considers not just wages and salaries, but also interest, dividends, private and government pension payments, and other transfers from governments.

Tax Freedom Day calculations are based on forecasts of personal income and federal and provincial budget tax revenue. When final revenue numbers become available at the end of each fiscal year and personal income data are updated by Statistics Canada, we revise our Tax Freedom Day calculations for previous years.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. 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 www.fraserinstitute.org.

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