For Canadian households, tax bills still rising faster than costs of living

New research finds that tax on Canadian families still takes a bigger bite out of income than life’s necessities

For Canadian households, tax bills still rising faster than costs of living

Building on research that it published last year, the Fraser Institute has released new findings confirming that taxes still take a greater toll on Canadian households than what they pay for their basic needs.

That was the finding of a report titled Taxes versus the Necessities of Life: The Canadian Consumer Tax Index. It was jointly authored by Milagros Palacios, Associate Director of the Addington Centre for Measurement at the Fraser Institute, and policy analyst Jake Fuss.

Tracking the total tax bill of the average Canadian family from 1961 to 2018, the institute found that it has grown by 2,246%, outpacing growth in housing costs (1,593%), clothing (769%), and food (639%). Canada’s consumer price index increased by 750% over that period, wrote Palacios and Fuss.

“In 2018, the average Canadian family earned an income of $88,865 and paid total taxes equaling $39,299 (44.2%),” they said. “In 1961, the average family had an income of $5,000 and paid a total tax bill of $1,675 (33.5%).”

The institute’s breakdown of the tax bill shouldered by the average Canadian household in 2018 included:

  • Income taxes - $12,242 (31.2% of the average household’s income);
  • Payroll & health taxes - $7,475 (19%);
  • Sales taxes - $5,839 (14.9%);
  • Property taxes -$4,254 (10.8%);
  • Profit tax - $4,726 (12%);
  • Liquor, tobacco, amusement, & other excise taxes - $1,855 (4.7%);
  • Fuel, motor vehicle licence, & carbon taxes - $1,096 (2.8%);
  • Other taxes - $1,071 (2.7%);
  • Natural resource taxes - $343 (0.9%); and
  • Import duties - $397 (1%)

Looking at how much of the average household’s income goes to basic necessities such as food, shelter, and clothing, the report found that it amounted to a combined 36.3% in 2018; that breaks down into 21.5% for shelter, 10.5% for food, and 4.3% for clothing. In 1961, basic necessities took a 56.5% share of income in total.

According to the report, the dramatic increase in the average household’s tax bill since 1961 arose from the interaction of a number of factors, including a 1,677% increase in average cash incomes and a cumulative tax-rate increase from 33.5% to 44.2%.

“Of course, taxes help fund important public services,” Fuss said in a statement. “But with more than 44 per cent of their income going to taxes, Canadians might wonder whether they’re getting good value for their tax dollars.”


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