Don't forget to vote on Tax Freedom Day
'More than a little ironic' that June 28 plays dual roles
Jonathan Chevreau
Financial Post
June 22, 2004
Next Monday is a big day for Canadians. Yes indeed, June 28 is the day we officially start working for ourselves and our families instead of sending taxes to three levels of government.
Funny, the official date for Tax Freedom Day 2004 seems ominously familiar. Oh yes, June 28 is also election day.
The coincidence is "more than a little ironic," says John Williamson, federal director for the Canadian Taxpayers Federation. "Canadians will begin working for themselves as they step into polling booths to vote."
Indeed, it's because it knew the release would go unnoticed next week that the Fraser Institute moved up the release date on its annual estimate, one it has provided since 1977.
Senior research economist Niels Veldhuis believes the institute's latest findings are relevant to taxpayers weighing which federal party to vote for next week.
"This is information Canadians need to make informed decisions," as they weigh the tradeoffs between tax levels and the benefits those taxes are alleged to provide.
Most families now spend half their income on taxes of all kinds -- more than they spend on housing, food, clothing, transportation and entertainment combined.
The average family with two or more members has a total tax bill of $36,782 on cash income of $75,436. Income tax is the real killer: $12,306 when you add the federal to the provincial take. Homeowners pay another $2,810 in property taxes.
Surprisingly, there are two bigger items: a whopping $5,962 from the GST and provincial sales taxes; and an astonishing $7,821 from social security, pension, medical and hospital taxes.
Other big tax grabs include $2,442 in sin and excise taxes, $1,002 in auto-related taxes, and $2,990 in corporate taxes.
Tax burdens vary by province. The earliest Tax Freedom Day is June 10 for Prince Edward Island, followed by June 13 in Alberta and New Brunswick. The latest is July 3 in British Columbia.
But Ontario is fast catching up to high-tax B.C. The new Ontario Health Premium is a big reason why Tax Freedom Day in Ontario moved from June 23 last year to June 27 today. Since the OHP kicks in half way through the year (July 1), Ontario's Tax Freedom day will likely fall a further four days later in 2005: likely hitting on or around Canada Day.
In the last year, the average Canadian family has been hit with a $1,327 increase in their total tax bill.
In effect, we now spend all winter and spring paying taxes, and work for ourselves in summer and fall. Compare our June 28 liberation day to April 11 in the United States and May 30 for the United Kingdom.
A full picture of the tax burden is available at www.fraserinstitute.ca, with eight tables telling the grisly story. The last table shows how the relative tax burden rises with incomes, reflecting the "progressive" structure of Canada' s income tax system.
For the top 10% of earners, the average tax rate hits 58.9% of cash income. For the top 50% --which includes the over-taxed middle class -- the average tax rate ranges from 47.4% to 58.9%.
By contrast, those with small incomes get off relatively lightly. The bottom 10% of families pay an average tax rate of only 14.9%, the second lowest decile pays an average 19.2% and the third 29.7%.
The tax burden was even higher in 2000, when Tax Freedom Day didn't arrive until July 2, nationally. That was the year the federal Liberals finally acted to slightly lower federal income taxes.
Since then, the pendulum has begun swinging to a later date. The current June 28 date is only four days before the peak. This "should be cause for concern," Veldhuis says.
"All the talk of tax relief has not resulted in meaningful reductions in the tax burden for Canadian families."
About three-quarters of the federal tax cuts of 2000 were wiped out by rises in Canada Pension Plan payments, airport security and other new taxes, says Williamson.
The Paul Martin Liberals of 2004 have not resurrected the tax cuts which were central to Jean Chretien's campaign in 2000.
"If you're looking at the three platforms, the Liberals will keep close to what it is. The Tories will reduce it and the NDP will clearly increase it," says Veldhuis.
Thus, a vote for the Liberals is in effect a vote for the status quo tax burden. A vote for the NDP is effectively a vote to delay Tax Freedom Day well into July or August. And a vote for the tax-cutting Conservatives or Green Party is a vote to move the day back to spring.
The ruling federal Liberals are "either unwilling or unable to control costs, cut waste and prioritize spending," said Williamson.
Ottawa has run balanced budgets since 1998 but now collects more in taxes than it budgets to spend each year. The CTF terms these multi-billion dollar surpluses "over-taxation."
The CTF is just as critical of Liberal Ontario. It recently launched a lawsuit to fight the new health tax imposed by Ontario Premier Dalton McGuinty. However, the case won't make it into court until Nov. 15.
Last week, the province rammed through the budget legislation so the CTF's protest won't prevent the OHP from coming off paycheques by the July 1 commencement date.
The CTF also has more than 150,000 signatures on a petition demanding McGuinty abide by the Taxpayer Protection Act he signed last fall.
So think about Tax Freedom Day as you cast your ballot -- even if tax freedom is the ultimate oxymoron.
'More than a little ironic' that June 28 plays dual roles
Jonathan Chevreau
Financial Post
June 22, 2004
Next Monday is a big day for Canadians. Yes indeed, June 28 is the day we officially start working for ourselves and our families instead of sending taxes to three levels of government.
Funny, the official date for Tax Freedom Day 2004 seems ominously familiar. Oh yes, June 28 is also election day.
The coincidence is "more than a little ironic," says John Williamson, federal director for the Canadian Taxpayers Federation. "Canadians will begin working for themselves as they step into polling booths to vote."
Indeed, it's because it knew the release would go unnoticed next week that the Fraser Institute moved up the release date on its annual estimate, one it has provided since 1977.
Senior research economist Niels Veldhuis believes the institute's latest findings are relevant to taxpayers weighing which federal party to vote for next week.
"This is information Canadians need to make informed decisions," as they weigh the tradeoffs between tax levels and the benefits those taxes are alleged to provide.
Most families now spend half their income on taxes of all kinds -- more than they spend on housing, food, clothing, transportation and entertainment combined.
The average family with two or more members has a total tax bill of $36,782 on cash income of $75,436. Income tax is the real killer: $12,306 when you add the federal to the provincial take. Homeowners pay another $2,810 in property taxes.
Surprisingly, there are two bigger items: a whopping $5,962 from the GST and provincial sales taxes; and an astonishing $7,821 from social security, pension, medical and hospital taxes.
Other big tax grabs include $2,442 in sin and excise taxes, $1,002 in auto-related taxes, and $2,990 in corporate taxes.
Tax burdens vary by province. The earliest Tax Freedom Day is June 10 for Prince Edward Island, followed by June 13 in Alberta and New Brunswick. The latest is July 3 in British Columbia.
But Ontario is fast catching up to high-tax B.C. The new Ontario Health Premium is a big reason why Tax Freedom Day in Ontario moved from June 23 last year to June 27 today. Since the OHP kicks in half way through the year (July 1), Ontario's Tax Freedom day will likely fall a further four days later in 2005: likely hitting on or around Canada Day.
In the last year, the average Canadian family has been hit with a $1,327 increase in their total tax bill.
In effect, we now spend all winter and spring paying taxes, and work for ourselves in summer and fall. Compare our June 28 liberation day to April 11 in the United States and May 30 for the United Kingdom.
A full picture of the tax burden is available at www.fraserinstitute.ca, with eight tables telling the grisly story. The last table shows how the relative tax burden rises with incomes, reflecting the "progressive" structure of Canada' s income tax system.
For the top 10% of earners, the average tax rate hits 58.9% of cash income. For the top 50% --which includes the over-taxed middle class -- the average tax rate ranges from 47.4% to 58.9%.
By contrast, those with small incomes get off relatively lightly. The bottom 10% of families pay an average tax rate of only 14.9%, the second lowest decile pays an average 19.2% and the third 29.7%.
The tax burden was even higher in 2000, when Tax Freedom Day didn't arrive until July 2, nationally. That was the year the federal Liberals finally acted to slightly lower federal income taxes.
Since then, the pendulum has begun swinging to a later date. The current June 28 date is only four days before the peak. This "should be cause for concern," Veldhuis says.
"All the talk of tax relief has not resulted in meaningful reductions in the tax burden for Canadian families."
About three-quarters of the federal tax cuts of 2000 were wiped out by rises in Canada Pension Plan payments, airport security and other new taxes, says Williamson.
The Paul Martin Liberals of 2004 have not resurrected the tax cuts which were central to Jean Chretien's campaign in 2000.
"If you're looking at the three platforms, the Liberals will keep close to what it is. The Tories will reduce it and the NDP will clearly increase it," says Veldhuis.
Thus, a vote for the Liberals is in effect a vote for the status quo tax burden. A vote for the NDP is effectively a vote to delay Tax Freedom Day well into July or August. And a vote for the tax-cutting Conservatives or Green Party is a vote to move the day back to spring.
The ruling federal Liberals are "either unwilling or unable to control costs, cut waste and prioritize spending," said Williamson.
Ottawa has run balanced budgets since 1998 but now collects more in taxes than it budgets to spend each year. The CTF terms these multi-billion dollar surpluses "over-taxation."
The CTF is just as critical of Liberal Ontario. It recently launched a lawsuit to fight the new health tax imposed by Ontario Premier Dalton McGuinty. However, the case won't make it into court until Nov. 15.
Last week, the province rammed through the budget legislation so the CTF's protest won't prevent the OHP from coming off paycheques by the July 1 commencement date.
The CTF also has more than 150,000 signatures on a petition demanding McGuinty abide by the Taxpayer Protection Act he signed last fall.
So think about Tax Freedom Day as you cast your ballot -- even if tax freedom is the ultimate oxymoron.
