Give and take

Canadian families spend more on taxes than the basic necessities of life

What’s your family’s largest expense? Canadians might say housing or food. But in reality, taxes consume more of the average Canadian family’s household income than anything else. When we say taxes, we’re talking about all the taxes you pay to all levels of government. This includes visible and hidden taxes: income taxes, payroll taxes, sales taxes, property taxes, health taxes, fuel taxes, vehicle taxes, import taxes, alcohol taxes and much more.

A recent study by the Fraser Institute tracked the total tax bill of the average Canadian family from 1961 to 2015. For 2015, we estimate that the average family (including single Canadians) earned $80,593 in income and paid $34,154 in total taxes. That’s 42.4 per cent of income going to taxes - more than the 37.6 per cent that goes to food, clothing and shelter combined. Indeed, Canadian families spend more on taxes than the basic necessities of life. It wasn’t always this way. In 1961, the first year we have calculations, the average family paid a much smaller portion of its household income in taxes (33.5 per cent) while spending much more on the basic necessities (56.5 per cent).

In fact, since 1961, the total tax bill has increased by 1,939 per cent, outpacing increases in shelter costs (1,425 per cent), clothing (746 per cent), and food (645 per cent). Even after accounting for inflation (the change in overall prices), the tax bill shot up 152.9 per cent over the period. And now taxes eat up more income than any other single family expense. While taxes help fund important government services, the issue is the amount of taxes that governments take compared to what we get in return. With more than 42 per cent of income going to taxes, Canadians might wonder whether they’re getting the best value for their tax dollars. That’s up to you to decide. But to make an informed assessment, you must have a complete understanding of all the taxes you pay. Unfortunately, it’s not so straightforward because the different levels of government levy such a wide range of taxes, with many buried in consumer prices. Therein lies the value of our calculations. An informed citizenry can hold government more accountable for the money it spends, and continue a public debate about the overall tax burden and whether we’re getting our money’s worth.