budgeting-personal-finance

The average Canadian family spends more on taxes than on food, clothing and shelter combined, finds a study by the Fraser Institute.

“Over the past five decades, the tax bill for the average Canadian family has ballooned, and now the amount of money going to taxes is greater than what’s spent on life’s basic necessities,” says Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of the Canadian Consumer Tax Index, which tracks the average Canadian family’s total taxes.

Read: Teachers would get school supply tax break under Trudeau

In 2014, the average Canadian family (including single Canadians) earned $79,010 and paid $33,272 in total taxes — compared to $28,887 on food, clothing and shelter combined.

In other words, 42.1% of income went to taxes while 36.6% went to basic necessities.

This represents a marked shift since 1961, when the average family spent 33.5% on taxes and 56.5% on food, clothing and shelter.

The total tax bill reflects both visible and hidden taxes that families pay to the federal, provincial and local governments, including income taxes, payroll taxes, sales taxes, property taxes, health taxes, fuel taxes, alcohol taxes, and more.

Read: Mystic Pizza owner sentenced to jail for tax evasion

Since 1961, the average Canadian family’s total tax bill increased by 1,886%, dwarfing increases in annual food costs (561%), clothing (819%) and shelter (1,366%). Even after accounting for changes in overall prices (inflation) over the 53-year period, the tax bill shot up 149.2%.

“With growth in the total tax bill outpacing the cost of basic necessities, taxes now eat up more family income, so families have less money available to spend, save or pay down household debt,” Lammam says.

“While taxes help fund important government services, the issue is the amount of taxes that governments take compared to what we get in return. With 42% of income going to taxes, Canadians might wonder whether they’re getting the best value for their tax dollars,” he adds.

Read: Harper promises tax breaks for service club volunteers

Originally published on Advisor.ca

Add a comment

You must be logged in to comment.

Register on Advisor.ca