CONTACT: Michael Walker, Executive Director, The Fraser Institute (604) 688-0221
Filip Palda, Professor at École Nationale d'Administration Publique in Montréal,
and Senior Fellow of The Fraser Institute (613) 549-8248
EMBARGO DATE: June 15, 1995
MEDIA RELEASE
VANCOUVER, BRITISH COLUMBIA >>> The average Canadian's tax burden is 46% of income. This is revealed in calculations released today by The Fraser Institute, an independent Canadian research institute. According to the figures, the average tax rate in the country is 46 percent of cash income for the average family comprised of two or more individuals. Total taxes of the average family rose by $859 over their year ago level.
The Vancouver-based research organization 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 in each year since 1977.
The Institute also calculates what it calls TAX FREEDOM DAY, that day in the year when the average Canadian family has done enough work to pay the total tax bill imposed on it by the various levels of government. According to the Institute's Executive Director, Dr. Michael Walker, "Tax Freedom Day is, effectively, the day when the average Canadian family starts working for itself. Until that point in the year, all of the family's earnings are required to pay its tax bill." Since 1961, Canada's Tax Freedom Day has advanced 46 days. In 1961, Tax Freedom Day fell on May 3rd. By 1974, Tax Freedom Day had advanced to June 8th, and in 1995 Tax Freedom Day falls on June 18th.
Tax Freedom Day falls on a different day in the provinces according to the extent of the provincial tax burden. The earliest Tax Freedom Day falls on May 18th in Nova Scotia. The latest date is in Saskatchewan--July 2nd.
The Institute's annual compilation of Tax Freedom Day arises from a major biennial study of tax burdens entitled Tax Facts. 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 calculations are done for three different kinds of average family. (All families including singles, families of two or more, and families of two parents and two children.)
Newfoundland, Prince Edward Island, New Brunswick, Quebec, Ontario and Manitoba experienced an advance in their Tax Freedom Days so that residents of those provinces have to work more days per year to pay all of the taxes they are required to pay in comparison with 1994.
The Institute also provides calculations of the Tax Freedom Day including the deferred taxation which corresponds to the government's deficits in each of the provinces and at the federal level. At some future date, taxes will have to be higher by the amount of the deficit, and 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, the Tax Freedom Day including deficits will be July 15th in 1995. The latest Tax Freedom Day including deficits is Saskatchewan, which will fall on July 20th, an advance of 19 days over that province's Tax Freedom Day without deficits. As mentioned, Canada's Tax Freedom Day including deficits would be July 15th, which is an advance of 27 days over Canada's Tax Freedom Day without deficits. The calculations show that 20 of the 27 days would be due to the federal deficit and the remaining 7 days to the provincial deficits. In 1994 Canada's Tax Freedom Day would have advanced 34 days had governments been unable to defer the tax burden. Twenty-four days would have been due to the federal deficit and 10 days due to the provincial deficits.
Currently, tax deferral amounts to $12.2 billion by the provinces and $32.7 billion by the federal government. This compares with $16.3 billion and $37.9 billion respectively in 1994.
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 62.1 percent of all taxes and earn 54.1 percent of all income. The bottom 30 percent of income earners pay 5.9 percent of all taxes and earn 10.9 percent of all income.