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The Fraser Institute: June 9 Is Tax Freedom Day, When Canadians Start Working for Themselves and Not Government

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/09/14 -- Tax Freedom Day for the average Canadian family falls on June 9, one day later than in 2013, according to the Fraser Institute's annual calculations.

Tax Freedom Day measures the total tax burden imposed on Canadian families by the federal, provincial and local governments. If you had to pay all your taxes up front, you'd give government each and every dollar you earned before Tax Freedom Day. The later the Tax Freedom Day, the heavier the tax burden.

"Without our Tax Freedom Day calculations, it's nearly impossible for Canadian families to know all the taxes they pay because governments levy such a wide range of taxes including income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, vehicle taxes, profit taxes, import taxes, 'sin' taxes on liquor and tobacco, and more," said Charles Lammam, resident scholar in economic policy at the Fraser Institute and co-author of Canadians Celebrate Tax Freedom Day on June 9, 2014.

After accounting for all taxes, the average Canadian family (with two or more people) in 2014 will pay $43,435 in total taxes, or 43.5 per cent of their annual income. On the calendar, this percentage translates into a June 9 Tax Freedom Day, when Canadians start working for themselves and their families instead of government.

So why does Tax Freedom Day come one day later this year?

Because the average Canadian family's total tax bill will increase at a faster rate than income. Specifically, total taxes will increase by 3.2 per cent (or $1,355) over last year while income will increase by 2.1 per cent (or $2,072).

"The delay in Tax Freedom Day this year continues a trend of delays since 2009 when it fell on June 3. And governments across the country are partly to blame since many have raised taxes after the recent recession to make up for big spending increases and deficits," Lammam said.

The $1,355 increase in the average Canadian family's total tax bill includes increases in income taxes ($589), payroll and health taxes ($364), sales taxes ($191) and property taxes ($47). No category of taxes decreased between 2013 and 2014.

"With a rising overall tax burden, household budgets get squeezed, limiting the amount of income families have to spend, save or pay down household debt," Lammam said.

But the tax burden doesn't stop there. When governments spend beyond their means, they borrow, incurring deficits, which are essentially deferred taxes. This year, the federal government and seven provincial governments are planning deficits totalling $18.8 billion, with Ottawa expecting a $2.9 billion deficit while the provinces expect combined deficits of $15.9 billion.

"According to our calculations, Tax Freedom Day would come five days later this year, on June 14, if Canadian governments covered their current spending with even greater tax increases instead of borrowing the shortfall," Lammam said.

Calculate your personal Tax Freedom Day using the Fraser Institute's online calculator.

Check out our short satirical Tax Freedom Day video on the Fraser Institute YouTube channel, and this interactive infographic.

Provincial Tax Freedom Days (earliest to latest)                 
                                  Tax Freedom         Change from
                                     Day 2014      2013 (in days)
Alberta                                23 May                  +1
Prince Edward Island                   5 June                  +2
British Columbia                       6 June                  +3
Ontario                                7 June                  +2
Saskatchewan                           7 June                  +2
New Brunswick                          9 June                  +3
Manitoba                              10 June                  +3
Nova Scotia                           14 June                  +2
Quebec                                14 June                  +1
Newfoundland & Labrador               22 June                  -1

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

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