The Fraser Institute

The Fraser Institute

April 26, 2012 06:32 ET

The Fraser Institute: Taxes Cost Canadian Families More Than Food, Clothing, and Shelter Combined

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 26, 2012) - A Canadian family earning an average income spends more money each year on taxes than on the basic necessities of life, concludes a new report published by the Fraser Institute, Canada's leading public policy think-tank.

The Canadian Consumer Tax Index 2012 calculates that over the past 50 years, an average family's total tax bill has increased by a staggering 1,738 per cent, while over the same period the cost of shelter increased by 1,185 per cent, food by 518 per cent, and clothing by 500 per cent.

"Taxes from all levels of government make up the single largest expenditure facing Canadian families," said Charles Lammam, Fraser Institute associate director of tax and budget policy research.

"In fact, the total tax bill has grown more rapidly than any other major item in an average family's annual budget since 1961."

The 1,738 per cent increase in the average tax bill has also greatly outpaced the increase in Statistics Canada's Consumer Price Index (663 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.

Unlike the Consumer Price Index, the Fraser Institute's Canadian Consumer Tax Index 2012 measures the price of goods and services that governments buy on behalf of Canadians. It calculates the total tax bill of the typical Canadian family by adding up the various taxes that a family pays to federal, provincial, and local governments 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.

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 2011, the average Canadian family (both attached and unattached individuals) earned income of $74,233 and paid $30,792 in taxes, for a total tax bill representing 41.5 per cent of family income.
  • In 1961, the average Canadian family earned income of $5,000 and paid $1,675 in taxes, for a total tax bill representing 33.5 per cent of family 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 to government taxes. By 1981, the spending demands had evened up: 40.8 per cent of an average family's income went to governments in the form of taxes, while 40.5 per cent was spent on shelter, food, and clothing. By 2011, the situation was reversed from 1961: the average family spent 33.6 of its income on the necessities of life while 41.5 per cent of its income went to taxes.

Government deficits a harbinger of higher taxes

The report points out that the federal government and most provincial governments are running budget deficits, meaning that current taxes don't cover current spending levels.

"These deficits are essentially deferred taxes into the future since the shortfalls must ultimately be repaid by working Canadians," Lammam said.

"If we include government deficits in the calculations, the total tax bill for the average Canadian family is actually $33,455 in 2011, not $30,792. This means the average Canadian family faces a future tax bill of an extra $2,663."

When current government deficits are included, the report calculates that the tax bill of the average Canadian family has increased by 1,897 percent since 1961.

"This growth is bound to increase unless governments take serious steps to reduce spending and eliminate their deficits," Lammam said.

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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 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

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