Average Canadian family spends 41 per cent of income on tax: Report

Families spend more on taxes than food, clothing and shelter combined
|payroll-reporter.com|Last Updated: 04/29/2011

In 2010, the average Canadian family spent about 41 per cent of its income on taxes, more than what it spent on food, clothing and shelter combined, according to a new report from the Fraser Institute.

“Taxes have grown over the past 49 years to the point that government is now the largest expenditure facing a family,” said Niels Veldhuis, co-author of the Canadian Consumer Tax Index 2011 and Fraser Institute senior economist.

The index tracked the total tax bill of the average Canadian family from 1961 to 2010. Including all types of taxes, this has increased by 1,686 percent since 1961, though the average family income has risen 1,348 per cent during the same period, according to the report.

In 2010, the average Canadian family earned an income of $72,393 and paid taxes of about $29,913. In 1961, the same family earned $5,000 and paid $1,675 in total taxes, it said.

In 1961, the average family spent 33.5 per cent of its income on taxes, while 56.5 per cent was required for food, clothing and shelter. In 2010, it spent 41.3 per cent on taxes and 34 per cent on basic necessities, said the report.

The index calculates the total tax bill paid by families with an average income by adding up taxes families pay to all three levels of government including income tax, sales tax, employment insurance and Canadian Pension Plan contributions. The institute also includes “hidden taxes” such as gas taxes and excise taxes on alcohol and tobacco.

The index does not include government deficits, but those are increased taxes families also face, said Charles Lammam, Fraser Institute senior policy analyst.

“If we include government deficits, we see the total tax bill for the average Canadian family is actually $33,275 in 2010, not $29,913. This means the average Canadian family faces a future tax bill of an additional $3,362,” he said.

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