Tax Freedom Day arrived five days earlier in 2006 compared to last year as tax cuts filtered into the system, although Canadians must still effectively work for almost half of the year before all of their tax liabilities are paid, according to the Fraser Institute, the free market think tank.
This year, Canadians started working for themselves on June 19th. Last year, it was June 24th and the latest that Tax Freedom Day has ever fallen in Canada was on June 25th, in 2000.
Tax Freedom Day then decreased to June 18 in 2001 before increasing to June 22 in 2002 and 2003, and June 23 in 2004.
“Although this year marks a reversal of the recent upward trend in taxation, Tax Freedom Day falls over a month and a half later than it did 45 years ago,” noted Niels Veldhuis, senior research economist at the Institute.
“In 1961, the earliest year for which the calculation has been made, Canada’s Tax Freedom Day was May 3," he added.
The Fraser Institute calculates Tax Freedom Day to provide a simple reference point about the impact of government tax collection. The Institute has been researching the comprehensive tax burden on the average family in Canada and in each of the provinces since 1977.
However, Veldhuis points out that Tax Freedom Day is not intended to measure the benefits Canadians receive from governments in return for their taxes.
“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 value for our money. It’s up to individual Canadians to decide how much value they receive in return for their tax dollars,” he commented.
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 (so-called 'sin' taxes), natural resource fees, fuel taxes, hospital taxes, and a host of other levies.
According to the Institute, tax relief announced in the 2006 federal budget has contributed to the decline. The reduction in the Goods and Services Tax (GST) from 7 percent to 6 percent accounted for one day of the five day decrease in Tax Freedom Day. In addition, many provincial governments also reduced taxes in 2006.
Government expectations of tax revenues can also contribute to a decline in Tax Freedom Day, which is calculated using provincial and federal government tax revenue forecasts.
“The good news for Canadian taxpayers is that the federal government and most provincial governments reduced tax rates in 2006,” commented Veldhuis.
However, conservative projections of tax revenues, especially relative to projected increases in personal incomes, can result in the reduction of Tax Freedom Day, Veldhuis explained.
“Unfortunately, given the conservative budget estimates of tax revenues there could well be an upward revision to Tax Freedom Day once actual tax revenues are tallied," he warned.
In 2006, the average Canadian family (with two or more individuals) earned $79,396 in income and paid a total of $36,650 in taxes. The cash income of the average Canadian family increased by 4.2 percent ($3,172) between 2005 and 2006. This compares to a much smaller increase of 1.4 percent ($510) in the total tax bill of the average Canadian family.
The largest increase came in the form of income taxes — up $482 for the average Canadian family. Other notable increases were in property taxes ($145) and profit taxes ($114).
The largest decreases for the average Canadian family from 2005 to 2006 were in sales taxes ($123) and natural resource levies ($155).
Tax Freedom Day can vary across Canada depending on provincial tax rates. This year, the earliest provincial Tax Freedom Day fell on June 6 in Alberta, while the latest date fell on June 27 in Quebec.All 10 Canadian provinces experienced a decrease in their Tax Freedom Days between 2005 and 2006.
This year's study found that the Canadian tax system remains broadly progressive, with the top 30 percent of income earners paying 65.9 percent of all taxes and earning 59.1 percent of all income, while the bottom 30 percent of all income earners pay 4.7 percent of all taxes and earn 9.4 percent of all income. .
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment