Tax Freedom Day Arrives For Canada

by Mike Godfrey, Tax-News.com, Washington

27 June 2005

Sunday, June 26, was an important date for Canada's taxpayers this year, marking the point at which the country's workforce effectively stopped working for the government and began working for themselves, according to the free market think-tank, the Fraser Institute.

While the tax rate (total taxes as a percentage of cash income) that the average Canadian family faces is unchanged from last year, Tax Freedom Day falls one day later as a result of the leap year in 2004.

Since 2001, Tax Freedom Day for the average Canadian family has steadily advanced. Tax Freedom Day fell on June 19 in 2001, June 23 in 2002, June 24 in 2003, and June 25 in 2004. This year, Tax Freedom Day falls on the same day as it did in 2000, the latest Tax Freedom Day in Canadian history.

In addition, six provinces are now at their latest Tax Freedom Days ever. Since this group includes the most populous provinces of Ontario and Quebec, many Canadians are paying the highest taxes in their history.

The Fraser Institute calculates Tax Freedom Day to provide a simple reference point regarding the impact of government tax collection. The Institute has been researching the comprehensive tax burden for the average family in Canada, and each of the provinces, since 1977.

“It is nearly impossible for an ordinary citizen to have a clear idea of how much tax they really pay. Tax Freedom Day gives Canadians a true picture of their total tax burden,” stated Niels Veldhuis, senior research economist at the Institute.

Veldhuis points out that Tax Freedom Day is not intended to measure the benefits Canadians receive from governments in return for their taxes. Rather, it looks at the price that they pay for a product: government.

“Tax Freedom Day is not a reflection of the quality of the product, how much of it each of us receives, or whether we get our money’s worth. It’s up to individual Canadians to decide how much value they receive in return for their tax dollars,” he noted.

Tax Freedom Day calculations include all taxes levied on Canadians such as income taxes, property taxes, and sales taxes, as well as profit taxes, health, social security and employment taxes, import duties, license fees, taxes on the consumption of alcohol and tobacco (‘sin’ taxes), natural resource fees, fuel taxes, hospital taxes, and a host of other levies.

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