VANCOUVER, BC- Tax Freedom Day, the day Canadians have paid
off the total tax bill imposed on them by government and can
finally start working for themselves, arrives on June 14th,
four days earlier than in 2007, according to The Fraser
Institute's annual Tax Freedom Day calculations.
"Canadians spend almost half the year working to pay all the
various taxes levied on them by federal, provincial and local
governments. Every dollar they earn before June 14 would be
required to pay the taxes owing to all levels of government,"
said Niels Veldhuis, The Fraser Institute's Director of Fiscal
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
"Given the number of different taxes imposed on Canadians,
it is virtually impossible to know exactly how much tax we pay.
The point of Tax Freedom Day is to give people a comprehensive
and easy-to-understand indicator of the total amount of taxes
paid to all three levels of government."
An Earlier Tax Freedom Day
This year Tax Freedom Day falls four days earlier than in
2007. The latest Tax Freedom Day in Canadian history was in
2005, when it fell on June 25. Tax Freedom Day moved forward to
June 23 in 2006 and June 18 in 2007.
"Even with the recent improvements, Tax Freedom day still
falls 40 days later than in 1961, the earliest year for which
we have calculations," Veldhuis said.
There are several reasons why Tax Freedom Day comes earlier
in 2008. The federal government's reduction in the Goods and
Services Tax (GST) to five per cent from six per cent, which
took effect on January 1, 2008, moved Tax Freedom Day up by two
Many provincial governments also reduced taxes in 2008. For
example, Saskatchewan reduced its corporate income taxes;
Manitoba cut its middle personal income tax rate, corporate
income tax and small business rates; and Newfoundland reduced
personal income taxes. Additionally, 2008 was a leap year,
which effectively moves Tax Freedom day up by one day.
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 the year.
Tax Freedom Day Among the Provinces
Tax Freedom Day varies from province to province, depending
on the taxation levels of provincial and local governments.
Alberta enjoys the earliest Tax Freedom Day on May 28, followed
by New Brunswick on June 3 and Prince Edward Island on June 4.
Next comes Manitoba (June 8), followed by Ontario (June 9),
Nova Scotia (June 12), British Columbia (June 13), and Quebec
(June 19). Saskatchewan has the second-latest Tax Freedom Day
(June 20) with Newfoundland and Labrador waiting the longest,
until June 30.
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 and Quebec, comes earlier than it would without these
transfers. On the other hand, Tax Freedom Days in the
traditional 'have' provinces of Ontario, Alberta, and British
Columbia come later than would be the case without these
All Canadian provinces saw Tax Freedom Day arrive earlier in
2008 than in 2007 with the greatest improvements coming in
Manitoba (seven days), and Saskatchewan and British Columbia
There is a also an ongoing 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. If natural resource revenues
are excluded, Tax Freedom Day is 27 days earlier in
Newfoundland and Labrador, 12 days earlier in Alberta, 11 days
earlier in Saskatchewan and five days earlier in British
Total Tax Bill Has Increased
In 2008, the average Canadian family (with two or more
individuals) will earn $90,678 and pay a total of $40,667 in
taxes, for a total tax bill amounting to 44.8 per cent of its
Income for the average Canadian family will increase by 2.8
per cent ($2,501) between 2007 and 2008 while the total tax
bill increases 0.6 per cent ($223). The largest increase among
the myriad of taxes comes in the form of income tax, up $365
for the average Canadian family.
Fairness in the Tax System
In addition to the size of the average family's tax bill,
there are concerns about the fairness of the Canadian tax
system. The top 30 per cent of income earners pay 66.6 per cent
of all taxes and earn 59.7 percent of all income, while the
bottom 30 per cent of all income earners pay 4.7 per cent of
all taxes and earn 9.1 per cent of all income. The overall
distribution shows that Canada's tax system is effectively
progressive and does extract proportionately more money from
those on the higher end of the income scale.
Canadians can calculate their personal Tax Freedom Day using
The Fraser Institute's Personal Tax Freedom Day Calculator.