tax-pain

The average family spends more on paying tax than on any other household expenses, finds a new study by the Fraser Institute.

Many Canadians think they spend most on housing, says economic policy scholar Charles Lammam, “but in reality, the average…family spends more on taxes than all basic necessities.” Lammam co-authored the Canadian Consumer Tax Index.

In 2013, the study says, households earned an average of $77,381, which means they paid $32,369 in total taxes, or 41.8 % of that income. In comparison, they spent only 36% of their money on food, shelter and clothing altogether.

Read: Tax tips for parents

In 1961, the average family earned approximately $5,000. They spent 33.5% on taxes and more than half of their incomes (56.5 %) on food, shelter and clothing. Even after inflation is accounted for, says Lammam, families are still spending more on taxes than they used to.

Read: Do fees or taxes impact portfolios more?

“Over the past five decades, total tax bill[s] grew much faster than the cost of basic necessities,” he adds. Also, “with more money going to the government, families have less to spend on things they care about,” such as paying down debt, paying for kids’ educations and saving for retirement.

Read:

“There’s no doubt taxes help fund important government services,” he explains, “but…with almost 42 % of [average] income going to taxes, Canadians should ask whether they get the best value for their tax dollars.”

Click here to watch a video that shows how tax bills have changed.

NOTE: The total tax bills of families represent both visible and hidden taxes paid to the federal, provincial and local governments. This includes income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, vehicle taxes, import taxes, alcohol and tobacco taxes, and more.

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Originally published on Advisor.ca

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