How much do Canadians pay in taxes?

We’re glad you asked!

Every June, the Fraser Institute proclaims a “Tax Freedom Day” to make the misleading claim that Canadians face an ever-growing tax burden. The Broadbent Institute’s new study, The Brass Tax, busts this myth. Here are a few key facts from the study to clear the air.

A typical Canadian family pays a total tax rate of 24%.

That includes income taxes, payroll taxes like CPP and EI contributions, and consumption taxes like GST/HST. Every tax paid by a typical Canadian family, added up.

In income tax, a typical Canadian family pays a rate of just 11%. Only the wealthiest 2% of Canadians pay more than 30% in income tax.

A typical Canadian family receives services equivalent to 63% of its household income every year.

Stuff like: roads, schools, emergency services, parks, water quality testing, restaurant inspectors, garbage pick-up, healthcare, police.

Taxes pay for things that make our lives better, and in some cases, things that just plain make our lives functional.

The Canadian economy is growing, but the proportion of tax revenue is actually going down.

Canadians are not hugely burdened with taxes. Of the 35 countries in the Organization for Economic Co-operation and Development (OECD), Canada ranks 25th when it comes to total tax revenue as a portion of GDP.

That’s right, we’re among the lowest taxed in developed countries. And we’re trending downwards.

Let’s talk about those Tax Freedom Day calculations….

Tax Freedom Day calculations include business taxes, oil and gas royalties, and other surprises in the amounts paid by families. We’re pretty sure that the typical Canadian household does not directly pay for those things.

Also, small nerd fight: the Fraser Institute is conflating “mathematical average” with the more conversational way people use the word average to paint an inaccurate picture.

Really wealthy Canadians push the mathematical average upwards. Meaning that 70% of Canadians earn less than the average income, and 75% of Canadians pay less in taxes than the average amount. So the (mathematical) average income is in fact well above what the “average” Canadian earns.

When most of us use the word “average,” we’re talking about the typical (or median) household- a number that is closer to the income that most people in Canada actually earn.

So yeah, they come up with a number that’s nearly double what we found.

The myth that Canadians have a high tax rate sells our country short

If you’re constantly telling Canadians we’re paying super-high tax rates, no wonder people think of taxes as a burden rather than as the foundation of services we all rely on.

The myth of a high tax rate not only undervalues public services, it undermines our ability to invest in programs that are key to the well-being of all Canadians. Arguing about taxes in solely mathematical terms means that we lose sight of the very real, good and useful things that they pay for.

We can’t stress this enough: taxes pay for things.

Useful things. Important things. And even things that are quite impressive.

We don’t want to have a math fight with the Fraser Institute. We want to talk about what Canada can be and how we can make life better for every Canadian.

Want to improve healthcare? Want universal daycare? Just want the *$#! potholes fixed? Tax revenue does that. So let’s start talking about what we want to do, together.