Around this time of the year, the right-wing Fraser Institute announces the arrival of Tax Freedom Day. They report that, this year, it falls on June 25, until which Canadians have been working to just pay their taxes.
Recently, the left-leaning Canadian Centre for Policy Alternatives challenged the Fraser Institute’s numbers saying that the “calculations understate the income of Canadians, overstate their taxes and misuse the concept of averages”. The report argues that the Fraser Institute understates incomes and overstates taxes and thus makes exaggerated claims. The CCPA estimates Tax Freedom Day for a median Canadian family to fall on April 28.
Since I keep extensive records of what I earn, spend and pay in taxes, I thought I’d use those numbers and arrive at my own conclusions. For our household income, I am including all employment income and all taxable interest, dividends and capital gains. I am excluding all contributions to retirement savings because tax is simply deferred. For our total tax bill, I am including federal and provincial taxes, an approximation of sales taxes based on our total annual household expenditure and property taxes. I am not counting motor vehicle license fees, gas tax, tobacco tax (I don’t smoke), liquor tax, amusement tax and a million other taxes, since the sales tax is probably overstated. I am also including CPP contributions and EI premiums as a tax, though it is debatable.
Based on the above observations, I estimate Tax Freedom Day for our household to fall on April 13, much closer to the CCPA’s estimate. Some caveats though: our household expenses relative to our income is very low, so our sales tax bill is probably far lower than a typical Canadian family. We also contribute the maximum allowed to our retirement accounts resulting in hefty savings at our marginal tax rates.
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4 responses so far ↓
1 Dave // Jul 3, 2005 at 10:37 pm
Instead of a tax freedom day, think about a govermental services free day. It wouldn’t be much different for a lot of people. The banks would be closed. The markets would be closed. The police and fire operations wouldn’t show up unless they were manned with volunteers.
Why is it in our discussions about taxes, people pay no attention to what they get for their tax dollars?
2 Arbee // Jul 4, 2005 at 10:27 am
Dave: I am definitely not saying we are getting no value for our tax dollars. Even if I get no value from my taxes, I realise that my taxes help less-fortunate Canadians. I am just making a point that the Fraser Institute’s numbers seem way off-base.
3 Nader // Jan 10, 2008 at 5:09 pm
Dave: If you have any common sense you could realize that based on the amount of contributions we don’t really get the services we should get back. Government of Canada is a rip off government and regular Canadians are quiet submissive lambs.
4 Tax Freedom Day 2008 // Jun 15, 2008 at 6:39 pm
[...] an annual tradition for me to write about the Tax Freedom Day (June 25th in 2005, June 23rd in 2006 and June 18th in 2007) and rant about our high taxes. The Fraser Institute [...]
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