Canadians Work Until June 24 to Pay Tax Bill

Release Date: 25 June 1996

Vancouver, B.C. >>> Canadians will work until June 24 to pay the total tax bill imposed by all levels of government, according to calculations released today by The Fraser Institute. Tax Freedom Day for Canadians is therefore June 25th.

"Tax Freedom Day is the day when the average Canadian family starts working for itself," said Fraser Institute Executive Director Michael Walker. "Until that date, all of a family's earnings are required to pay the taxman." Since 1961, Canada's Tax Freedom Day has advanced 53 days. In 1961, Tax Freedom Day fell on May 3rd. By 1974, Tax Freedom Day had advanced to June 8th, and in 1996 Tax Freedom Day falls on June 25th (see tables).

Tax Freedom Day for each province varies according to the extent of the provincial tax burden. The earliest Tax Freedom Day falls on May 28th in Prince Edward Island, the latest date is June 30th in British Columbia.

Newfoundland, P.E.I., and British Columbia experienced an advance in their Tax Freedom Days, meaning that residents of those provinces have to work more days per year to pay off their obligations to government. Tax Freedom Day is earlier than last year in Nova Scotia, Manitoba, Saskatchewan, and Alberta. Cash income is expected to be higher in the prairies due to a one time transfer to grain farmers from the Western Grain Transition Payments Act because of the removal of the Crow Rate subsidy.

Due to recent interest about the fairness of the Canadian tax system, this year the Fraser Institute has calculated the decile distribution of income and taxes. This distribution shows that the top 30 percent of income earners pay 62.5 percent of all taxes and earn 54.6 percent of all income. The bottom 30 percent of income earners pay 5.7 percent of all taxes and earn 10.7 percent of all income.

The calculations reveal that the average Canadian's tax burden is 48% of income. Total taxes of the average family rose by $390 over last year.

The Fraser Institute also calculated the Tax Freedom Days for Canada and the provinces based on deferred taxation, which corresponds to government deficits. The institute has calculated what the tax burden of the average family would be today if governments had to cover current expenditures with current taxation and were not able to defer the tax burden.

For Canada, Tax Freedom Day including deficits will be July 16th in 1996, an advance of 21 days over Canada's Tax Freedom Day without deficits. The calculations show that 15 of the 21 days would be due to the federal deficit and the remaining 6 days to the provincial deficits. The latest Tax Freedom Day including deficits will fall on July 24th in Ontario, an advance of 28 days over that province's Tax Freedom Day without deficits.

Currently, tax deferral amounts to $10.9 billion by the provinces and $24.3 billion by the federal government. This compares with $12.4 billion and $32.7 billion respectively in 1995.

The figures released today include revisions to past calculations, based on recent provincial and federal budgets and on data made available since the last biennial study in 1994.

The Fraser Institute is the only group that calculates the comprehensive tax burden for the average family and provides annual measurements of the tax burden in the various provinces. These calculations have been made by the Institute since 1977.

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information contact:

Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

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Last Modified: Wednesday, October 20, 1999.