Tax Freedom Day arrives a day later, leaves us another dollar short
After more than five months of working for the man, Canadians can start saving
VANCOUVER—Today’s the day the average Canadian family stops paying taxes and starts earning for themselves.
June 10 is this year’s Tax Freedom Day for the average Canadian family, one day later than in 2014, according to the Fraser Institute’s annual calculations.
In 2015, the average Canadian family (with two or more people) will pay $44,980 in total taxes or 43.7 per cent of its annual income. On the calendar, those numbers represent more than five months of income—from January 1 to June 9. It’s not until June 10—Tax Freedom Day—when families start working for themselves, not the government. The heavier the tax burden, the later the Tax Freedom Day.
And this year’s Tax Freedom Day is one day later than last year’s. This is because the average Canadian family’s total tax bill will increase at a faster rate (3.1 per cent) than the growth in income (2.1 per cent).
“Governments across Canada are partly to blame for the increased tax burden because many have raised taxes again this year,” said Charles Lammam, the director of fiscal studies at the Fraser Institute.
The $1,353 net increase in the average Canadian family’s total tax bill this year includes increases in income taxes, payroll and health taxes, sales taxes and auto, fuel and motor vehicle taxes, among others.
This year’s later Tax Freedom Day continues a trend of delays that began in 2009 when it fell on June 3.
“With a rising overall tax burden, household budgets get squeezed, limiting the amount of income families have to spend, save or pay down household debt,” Lammam said.
Though taxes take a significant toll on every Canadian, they can be even more burdensome for small business owners.
“Small business are effected both as consumers and as business owners. They have not only all the same personal taxes to pay as any other Canadian, but on top of that, they are massive contributors to taxation from their businesses themselves,” Dan Kelly, president and CEO of the CFIB, said.
With such a significant amount of their revenue going toward taxes, there’s often not a lot left, Kelly added.
“If the money’s in the business it’s getting taxed, if the money’s taken out of the business it can benefit the family of the business owner, then it gets hit again. It is a significant burden,” he said.
Kelly also pointed to the “massive” tax administration cost businesses spend to collect sales taxes as a major issue for small businesses. The CFIB wants to see governments hold the line on taxation. But as Tax Freedom Day extends later and later each year, Canadian businesses, as well as all Canadians continue to feel the squeeze.
On a provincial basis, Alberta comes out ahead. The province’s Tax Freedom Day fell on May 19 this year. Most other provinces must wait until mid-June to free themselves of taxes for the year. Ontario’s tax freedom day corresponds with the national average, falling on June 10, while Newfoundlanders must wait until June 21 to start earning for themselves.