MONTREAL, QUEBEC--(Marketwire - June 11, 2012) - Tax Freedom Day falls on Sunday, June 17 in Quebec, four days later than in 2011, according to the Fraser Institute's annual Tax Freedom Day calculations.
"The provincial government's decision to hike the QST to 9.5 per cent from 8.5 per cent is one of the main reasons for the later arrival of Tax Freedom Day this year," said Filip Palda, Fraser Institute senior fellow and professor at the École nationale d'administration publique.
"As a result of the tax hike, the average Quebec family will pay $491 more in sales taxes in 2012. Had the government not raised the QST, Tax Freedom Day would have fallen two days earlier, on June 15 rather than June 17."
Quebec celebrates the second latest Tax Freedom Day among all Canadian provinces, ahead of only Newfoundland and Labrador. The complete report is available at www.fraserinstitute.org.
On Tax Freedom Day, the average Quebec family has earned enough money to pay the taxes imposed on it by all levels of government over the course of the year. If Quebecers were required to pay all of their taxes up front, they would have to pay governments each and every dollar they earned prior to Tax Freedom Day.
"Quebec families face among the greatest tax burdens nationwide. For perspective, families in Ontario celebrate Tax Freedom Day on June 10, a full week earlier than those in Quebec," Palda said.
When calculations of tax rates are averaged across Canada, Tax Freedom Day falls nationally on June 11.
Tax Freedom Day varies from province to province, depending on the taxation levels of provincial and local governments. Alberta continues to enjoy the earliest Tax Freedom Day on May 22, followed by Prince Edward Island on June 2 and New Brunswick on June 6. Manitoba's Tax Freedom Day falls on June 7 followed by British Columbia (June 8), Ontario (June 10), Saskatchewan and Nova Scotia (June 12), and Quebec on June 17. Newfoundland and Labrador has the latest Tax Freedom Day, June 21.
While all but three Canadian provinces (Newfoundland and Labrador, BC, and Alberta) experience a later Tax Freedom Day in 2012 than in 2011, Quebec experiences the largest delay in its 2012 Tax Freedom Day, coming four days later than in 2011.
Reasons for a later Tax Freedom Day
Aside from the increase in the QST, Quebec increased its gas and mining taxes, along with contributions to its Health Services Fund (health tax) for 2012.
Canada's improving economy also contributed to a later Tax Freedom Day in 2012. When the economy recovers from a recession and incomes increase, a family's tax burden tends to increase to a greater extent because of Canada's progressive tax system which imposes higher taxes as Canadians earn more money. Household consumption also rises, which results in an increase in the amount of sales and other consumption taxes that families pay.
The report also highlights the impact of government deficits on Tax Freedom Day.
"Today's federal and provincial deficits must one day be paid for by taxes. If the Quebec and federal government had increased taxes to balance their budgets rather than running deficits, Quebec's Tax Freedom Day would fall on June 23-six days later," Palda said.
Total Tax Bill
In 2012, the average Quebec family (with two or more individuals) will earn $82,090 and pay $37,516 in taxes, or 45.7 per cent of its total income.
The total tax bill for the average Quebec family will increase by $1,770 (5.0 per cent) in 2012. This is the third highest percentage increase in the total tax bill among all provinces.
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. As is the case every year, 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.
Quebecers can calculate their personal Tax Freedom Day using the Fraser Institute's Personal Tax Freedom Day Calculator: http://www.fraserinstitute.org/tools/personal-tax-calculator.aspx.
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 80 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.