Canadian family paid more in taxes than it did on housing, food and clothing combined
Consumer Tax Index 2021 edition
NORTHERN, ONTAIRO ~~~~~~ August 14, 2021 (LSNews) Even with a substantial COVID-driven reduction in tax revenue, the average Canadian family paid more in taxes than it did on housing, food and clothing combined
The Canadian Consumer Tax Index, 2021 Edition is a new study that finds even with a substantial COVID-driven reduction in tax revenue, the average Canadian family still spent over 36 per cent of its income on taxes in 2020 compared to 35.4 per cent on basic necessities—more than housing, food and clothing costs combined. Since 1961, the average Canadian family’s total tax bill has increased nominally by 1,992 per cent,
- The Canadian Consumer Tax Index tracks the total tax bill of the average Canadian family from 1961 to 2020. Including all types of taxes, that bill has increased by 1,992% since 1961.
- Taxes have grown much more rapidly than any other single expenditure for the average Canadian family: expenditures on shelter increased by 1,671%, clothing by 629%, and food by 767% from 1961 to 2020.
- The 1,992% increase in the tax bill has also greatly outpaced the increase in the Consumer Price Index (773%), which measures the average price that consumers pay for food, shelter, clothing, transportation, health and personal care, education, and other items.
- The average Canadian family now spends more of its income on taxes (36.4%) than it does on basic necessities such as food, shelter, and clothing combined (35.4%). By comparison, 33.5% of the average family’s income went to pay taxes in 1961 while 56.5% went to basic necessities.
- In 2020, the average Canadian family earned an income of $96,333 and paid total taxes equaling $35,047 (36.4%). In 1961, the average family had an income of $5,000 and paid a total tax bill of $1,675 (33.5%).
- This bulletin shows a sharp drop-off in the tax bill from 2019 to 2020. However, this is a temporary and isolated incident that is entirely due to the economic and fiscal circumstances of the COVID-19 pandemic.
The Canadian tax system is complex and there is no single number that can give us a complete idea of who pays how much. That said, the Fraser Institute annually calculates the most comprehensive and easily understood indicator of the overall tax bill of the average Canadian family: Tax Freedom Day (see Palacios et al., 2021). This publication draws from those calculations and examines what has happened to the tax bill of the average Canadian family over the past 59 years.
1 To do this, we have constructed an index of the tax bill of the average Canadian family, the Canadian Consumer Tax Index, for the period from 1961 to 2020. The total tax bill In order to calculate the total tax bill of the average Canadian family, we add up all the various taxes that the family pays to federal, provincial, and local governments. This includes income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, carbon taxes, vehicle taxes, import taxes, alcohol and tobacco taxes, and the list goes on. Average Canadians also pay the taxes levied on businesses. Although businesses pay these taxes directly, the cost of business taxation is ultimately passed onto ordinary Canadians.2 1 The Tax Freedom Day calculations are for the average Canadian family with two or more people. The average family in this publication includes families and unattached individuals. That is why the data for the same year are different. For instance, in 2020 the tax rate for the average Canadian family with two or more people was 37.2% and for the average family including unattached individuals it was 36.4% (see Palacios et al., 2021).
Senior Economist, Fraser Institute
Research Intern, Fraser Institute
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