VANCOUVER, June 19 /CNW/ - Starting tomorrow, Canadians have paid off the
total tax bill imposed on them by government and can finally start working for
themselves, according to The Fraser Institute's annual Tax Freedom Day
"If you look at the average Canadian family's total tax bill, each and
every dollar they earn before June 20 would be required to pay the taxes owing
to all levels of government. It takes until June 20 before they begin earning
money for themselves," said Niels Veldhuis, The Fraser Institute's Director of
the Centre for Tax Studies.
The Fraser Institute calculates Tax Freedom Day to provide a
comprehensive indicator of the total amount of taxes paid by the average
Canadian family to all three levels of government: federal, provincial, and
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
An Earlier Tax Freedom Day
This year Tax Freedom Day falls four days earlier than in 2006. The
latest Tax Freedom Day in Canadian history was in 2000, when it fell on
June 25. Tax Freedom Day moved forward to June 17 in 2001 before steadily
retreating to June 24 in 2005 and 2006.
"Even with the recent improvements, Tax Freedom day still falls almost
two months later than in 1961, the earliest year for which we have
calculations," Veldhuis said.
Tax Freedom Day arrives earlier this year in part because of the federal
government's 2006 reduction of the Goods and Services Tax (GST) to
six per cent from seven per cent, Veldhuis said. While the sales tax reduction
took place in mid-2006, Canadians receive the benefits for an entire year in
2007. Additionally, several provincial governments reduced taxes in 2007.
But Veldhuis cautions that an earlier Tax Freedom Day can also be
generated by cautious revenue projections on the part of Canadian governments.
Federal and provincial budget forecasts of how much revenue they will collect
are one of the key components of the Tax Freedom Day calculations. Low
projections for tax revenue, especially relative to projected increases in
personal incomes, can result in Tax Freedom Day appearing to fall earlier in
Total Tax Bill Has Increased
In 2007, the average Canadian family (with two or more individuals) will
earn $83,775 and pay a total of $38,992 in taxes, for a total tax bill
amounting to 46.5 per cent of its income.
The average Canadian family will see its income increase by 3.4 per cent
($2,760) between 2006 and 2007 while the total tax bill increases by
1.5 per cent ($580). The largest increase among the myriad of taxes comes in
the form of property taxes, up $279 for the average Canadian family. Other
notable increases come in profit taxes ($256) and social security taxes
($118). Liquor taxes and natural resource levies both decreased between 2006
Tax Freedom Day Among the Provinces
Tax Freedom Day varies from province to province, depending on the
taxation levels of each provincial government. Alberta enjoys the earliest Tax
Freedom Day on June 1, followed by New Brunswick and Prince Edward Island
(June 14), BC and Manitoba (June 16), Ontario and Nova Scotia (June 19), and
Saskatchewan (June 22). Quebec has the second-latest Tax Freedom Day, on
June 26, while Newfoundland and Labrador wait the longest, until July 1.
The Atlantic Provinces historically have had some of the country's
earliest Tax Freedom Days in part because a large share of their total revenue
is transferred from other provinces through the federal government's
equalization payments. Tax Freedom Day in those provinces, as well as in
Manitoba, Saskatchewan and Quebec, comes earlier than it would without these
All Canadian provinces, except New Brunswick and Newfoundland and
Labrador saw Tax Freedom Day arrive earlier in 2007 than in 2006 with the
Western provinces experiencing the greatest improvements.
Taxpayers in Newfoundland and Labrador celebrate Tax Freedom Day six days
later than in 2006. But Veldhuis notes that the later arrival of Tax Freedom
Day in Newfoundland and Labrador is the result of a significant increase in
provincial revenues from natural resource royalties.
There is a question as to whether natural resource royalties are actually
a tax or simply the conversion of an asset (natural resources such as oil and
gas) into an income stream for the province. When natural resource revenues
are excluded from the calculation, the impact of important personal tax relief
brought in by the Newfoundland and Labrador government becomes clear as Tax
Freedom Day arrives on June 13, six days earlier than in 2006.
Removing natural resource revenues from the 2007 calculations also
results in earlier Tax Freedom Days for other resource-rich provinces: Alberta
gains 13 days, Saskatchewan gains nine days, and British Columbia would
celebrate Tax Freedom Day six days earlier.
"It is virtually impossible for the average Canadian to know how much
they truly pay in taxes. The aim of Tax Freedom Day is to give people a true
indication of the amount of money we pay in taxes each year," Veldhuis said.
Canadians can calculate their personal Tax Freedom Day using The Fraser
Institute's Personal Tax Freedom Day Calculator at www.fraserinstitute.ca. The
report, Canadians Celebrate Tax Freedom Day on June 20, is also available at
The Fraser Institute is an independent research and educational
organization based in Canada. Its mission is to measure, study, and
communicate the impact of competitive markets and government intervention on
the welfare of individuals. To protect the Institute's independence, it does
not accept grants from governments or contracts for research. Visit
For further information:
For further information: Niels Veldhuis, Director of the Centre for Tax
Studies, The Fraser Institute, Tel. (604) 714-4546, Email:
email@example.com; Dean Pelkey, Associate Director of Communications,
The Fraser Institute, Tel: (604) 714-4582, Email firstname.lastname@example.org