Starting tomorrow, Canadians will have paid off the total tax bill imposed on them by governments and will start working for themselves, according to The Fraser Institute’s annual Tax Freedom Day calculations.
“Canadians spend almost half the year working to pay all the various taxes levied on them by federal, provincial and local governments. Every dollar they earn before June 14 would be required to pay the taxes owing to all levels of government,” said Niels Veldhuis, the Fraser Institute’s director of fiscal studies.
The calculations also show that Tax Freedom Day, June 14, is four days earlier this year than in 2007. This is partly due to the reduction in the GST to five per cent from six per cent last year and provincial tax reductions.
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.
“Given the number of different taxes imposed on Canadians, it is virtually impossible to know exactly how much tax we pay. The point of Tax Freedom Day is to give people a comprehensive and easy-to-understand indicator of the total amount of taxes paid to all three levels of government," said Veldhuis.
This year Tax Freedom Day falls four days earlier than in 2007. The latest Tax Freedom Day in Canadian history was in 2005, when it fell on June 25. Tax Freedom Day moved forward to June 23 in 2006 and June 18 in 2007.
“Even with the recent improvements, Tax Freedom Day still falls 40 days later than in 1961, the earliest year for which we have calculations,” said Veldhuis.
Many provincial governments reduced taxes in 2008. For example, Saskatchewan reduced its corporate income taxes; Manitoba cut its middle personal income tax rate, corporate income tax and small business rates; and Newfoundland and Labrador reduced personal income taxes.
An earlier Tax Freedom Day can also be generated by cautious revenue projections on the part of Canadian governments, said Veldhuis. Low projections for tax revenue, especially relative to projected increases in personal incomes, can result in Tax Freedom Day appearing to fall earlier in the year.