GOLDSTEIN: Tax Freedom Day is Sunday, June 8, when Canadians finally start working for themselves: report

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Tax Freedom Day — when Canadians stop working for the government in order to pay their taxes and start working for themselves — will arrive on Sunday, June 8 this year, according to a new study by the Fraser Institute. 

“If Canadians paid all their taxes up front, they would work the first 158 days of this year before bringing any money home for themselves and their families,” said Jake Fuss, the Fraser Institute’s director of fiscal studies. 

Using the example of an average Canadian family with two or more members earning $158,533 annually, the study says they will pay an estimated $68,266 in total taxes or 43.1% of their annual income. 

Families and unattached individuals with an income of $120,135 annually will pay $50,218 in total taxes, or 41.8% of their income, according to the annual survey. 

Federal taxes account for 58% of the total tax bill, provincial taxes 36% and municipal taxes 6%. 

Canadians can calculate their Tax Freedom Day using the Fraser Institute’s personal tax freedom calculator at fraserinstitute.org. 

The annual survey by the fiscally conservative think tank also says that given projected federal and provincial deficits this year totalling almost $90 billion, what it describes as Balanced Budget Tax Freedom Day will be delayed by almost two weeks until June 21, if governments were obliged to cover current expenditures with current taxation. 

“Today’s deficits must one day be paid for by taxes,” the study says. “Deficits should therefore be considered as deferred taxation.” 

Taxes used to compute Tax Freedom Day imposed by the federal, provincial and municipal governments include income taxes, payroll taxes, health taxes, sales taxes, property taxes, profit taxes, excise taxes, alcohol and tobacco taxes, fuel taxes, carbon taxes, motor vehicle licence fees, import duties, natural resource fees and other levies. 

They pay for public services including health care, public education, social welfare programs, national defence, policing, firefighting, waste collection, road construction and repair and fund entitlement programs such as employment insurance, Canada Pension Plan and Old Age Security.

According to the survey, “Tax Freedom Day helps put the total tax burden in perspective and helps Canadians understand just how much of their money they pay in taxes every year. 

“It is important to note that Tax Freedom Day is not intended to measure the benefits Canadians receive from governments in return for their taxes. Rather it looks at the price that is paid for a product — government. Tax Freedom Day is not a reflection of the quality of the product, how much of it each of us receives, or whether we get our money’s worth. Those are questions only each of us can answer for ourselves.” 

Tax Freedom Day arrives one day earlier this year than in 2024 when it fell on June 9, based on the expectation that total tax revenues forecasted by the federal, provincial and municipal governments this year will increase at a slower rate than the incomes of Canadians. 

The latest Tax Freedom Day occurred in 2000 when it fell on June 27, almost two months after the earliest Tax Freedom Day of May 3 in 1961. 

The study says the precise Tax Freedom Day for Canadians depends on which province they live in. 

This year, Tax Freedom Day came earliest in Manitoba (May 17) and will arrive latest in Quebec (June 21). 

Tax Freedom Day in the other provinces in ascending order were May 31 for Alberta, Saskatchewan and British Columbia; June 2 in Prince Edward Island; June 4 in New Brunswick; June 7 in Ontario; June 10 in Nova Scotia and June 19 in Newfoundland and Labrador. 

“The Canadian tax system is complex and no single number can give us a complete idea of who pays how much,” the study concludes. 

“That said, Tax Freedom Day is the most comprehensive and easily understood indicator of the overall tax bill of the average Canadian family.” 

Finally, it should be noted that calculating the total tax levels Canadians pay has long been a controversial issue and critics of how the Fraser Institute calculates Tax Freedom Day say its numbers are incorrect and misleading, 

These criticisms include that the use of average family incomes instead of median incomes inflates the amount of money average Canadians pay in taxes; that it includes taxes paid by businesses as if they were being paid by families and that it fails to calculate the benefits families receive from paying taxes such as hospitals, schools and other public infrastructure they could not otherwise afford.

A more accurate calculation of Tax Freedom Day, they say, would be weeks or months earlier than the Fraser Institute claims.