Do you feel like half of your paycheque goes toward paying taxes? Well, that’s not just a feeling or an exaggeration.
A study has found that the average Canadian family spends most of its income on taxes instead of necessities.
The Fraser Institute released the 2024 edition of the Canadian Consumer Tax Index in July, revealing how much households spent on taxes in 2023.
The report found that the average family spent 43% of its income on taxes last year, more than the 35.6% spent on basic needs like housing, food and clothing combined.
Fraser Institute
“Taxes remain the largest household expense for families in Canada,” said Jake Fuss,
director of Fiscal Studies at the public policy think-tank and co-author of the study.
According to the report, the average household earned an income of $109,235 and paid, in total, taxes equaling $46,988.
The Fraser Institute says this is a dramatic shift since 1961, when the average family spent less of its income on duties (33.5%) than on bare necessities (56.5%).
“Taxes have grown much more rapidly than any other single expenditure for the average Canadian family,” reads the report.
However, it’s important to note that today’s tax-funded federal programs and social services may not have existed back then. One example is the Canada Health Act, which passed in 1984 and provides Canadians with free healthcare.
The Fraser Institute also attributes this spike in spending to “visible and hidden” costs like income, payroll, sales, property, carbon, health, fuel, and alcohol taxes.
The report added that since 1961, the average Canadian household’s total tax bill has increased nominally by 2,705%, dwarfing increases in annual housing costs (2,006%), clothing (478%) and food (901%).
“Considering the sheer amount of income that goes towards taxes in this country,
Canadians may question whether or not we’re getting good value for our money,” said Fuss.
As Canadians grapple with rising food costs and housing affordability, basic necessities aren’t getting any cheaper either.
This article was originally published on July 31, 2024. It has since been updated.