NCPA - National Center for Policy Analysis

Canadian Tax Burden Up 1,286 Percent Since 1961

March 17, 1999

The average Canadian family currently pays out more money in taxes than they do for the necessities of life -- shelter, food and clothing -- combined, according to a new study from the Fraser Institute. This stands in stark contrast to 1961, the first year such comparisons were made.

  • In 1961, the average family had an income of C$5,000 and paid a tax bill of C$1,675.
  • In 1998, the average family earned C$49,996 and paid C$23,218 in taxes -- an increase of 1,286 percent in the actual number of dollars paid.
  • While income taxes are the largest single tax in Canada, income taxes by themselves account for less than half of the total tax bill.
  • Taxes on such things as sales, property and motors account for over 63 percent of the total tax bill.

Experts also note that corporate taxes are paid disproportionately by seniors. Canadians 65 and over paid 48.2 of the corporate tax bill due to their heavy reliance on investment earnings for retirement income; therefore taxes levied on corporations actually represent a significant burden to pension income recipients.

Researchers also examined the so-called marriage penalty.

  • They found that for a single-earner family with an annual income of C$50,000 the gross tax rate was 24.7 percent.
  • In contrast, dual income earners with the same annual income would pay only 16.9 percent of their income as taxes.

This result is consistent with other income levels.

The study suggests that while fiscal restraint has been a buzzword among Canadian governments, it is clear that taxation is still the most significant economic aspect of a Canadian's life.

Source: Joel Emes and Michael Walker, "Tax Facts 11," March 11, 1999, Fraser Institute, 4th Floor, 1770 Burrard Street, Vancouver, BC V6J 3G7, Canada, (604) 688-0221.


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