The Fraser Institute

The Fraser Institute

April 23, 2013 06:32 ET

The Fraser Institute: Taxes Consume Larger Share of Family Budgets Than Basic Necessities of Life

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 23, 2013) - Canadian families are spending more money on taxes than on food, clothing, and shelter combined, reveals a new report from the Fraser Institute, an independent, non-partisan Canadian think-tank.

The Canadian Consumer Tax Index calculates that in 2012, 42.7 per cent of an average family's income went towards taxes (including all types of taxes imposed by federal, provincial, and local governments) while 36.9 per cent was spent on food, clothing, and shelter combined.

"Taxes are far and away the largest and fastest-increasing expense in the average household budget," said Charles Lammam, Fraser Institute associate director and co-author of the Canadian Consumer Tax Index.

"In fact, the tax bill for the average family has grown a whopping 1,787 per cent since 1961."

This 1,787 per cent growth has outpaced increases in the cost of shelter (1,290 per cent), clothing (607 per cent), and food (578 per cent). It has also outpaced the growth in Statistics Canada's Consumer Price Index (675 per cent), which measures the average price that consumers pay for goods and services including shelter, food, clothing, transportation, health and personal care, education, and many others.

The Fraser Institute's Canadian Consumer Tax Index tracks the total tax bill of the average Canadian family from 1961 to 2012 by adding up the various taxes that a family pays to federal, provincial, and local governments, including income taxes, sales taxes, property taxes, Employment Insurance and Canadian Pension Plan contributions, and "hidden" taxes such as import duties, profit taxes, and gas taxes.

This year's index shows that while the average family's income has increased significantly over the past five decades, the average tax bill has grown even more:

  • In 2012, the average Canadian family (which includes both families and unattached individuals) earned income of $74,113 and paid $31,615 in taxes, for a tax bill representing 42.7 per cent of total income.
  • In 1961, the average Canadian family earned income of $5,000 and paid $1,675 in taxes, for a tax bill representing 33.5 per cent of total income.

The report also notes that in 1961, the average family spent 56.5 per cent of its income to pay for shelter, food, and clothing; in the same year, 33.5 per cent of the family's income went towards taxes. By 2012, the situation was reversed from 1961: the average family spent 36.9 of its income on basic necessities while 42.7 per cent of income went to paying taxes.

Deficits as deferred taxation

Unfortunately, the federal and most provincial governments are running budget deficits, meaning that today's taxes do not cover current levels of government spending.

"The outlook for taxpayers is bleak, since deficits must one day be paid for by working Canadians unless governments take serious steps to reduce spending," Lammam said.

"When government deficits, aka deferred taxes, are factored in, the total tax bill for the average Canadian family has increased by 1,932 per cent since 1961."

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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

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