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June 9 is tax freedom day!

Image: http://opinion.financialpost.com

Image: http://opinion.financialpost.com

According to the Fraser Institute’s annual calculations Tax Freedom Day for the average Canadian family falls on June 9, one day later than in 2013. This day is when Canadians start working for themselves and not government.

What does that mean?

According to Paul Nightingale, Deputy Director of the Science Policy Research Unit (SPRU) at the University of Sussex, the concept was developed in the United States in 1948 by Dallas Hostetler who showed his entrepreneurial skill by trademarking the phrase. His yearly calculations were transferred to the Tax Foundation in 1971, and since then they have calculated it each year, gradually expanding its application to individual US States and now other nations.

In relation to Canada, Tax Freedom Day measures the total tax burden imposed on Canadian families by the federal, provincial and local governments, including income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, vehicle taxes, profit taxes, import taxes, ‘sin’ taxes on liquor and tobacco, and more. If you had to pay all your taxes up front, you’d give government each and every dollar you earned before Tax Freedom Day. “The later the Tax Freedom Day, the heavier the tax burden”.

After accounting for all taxes, the average Canadian family (with two or more people) in 2014 will pay $43,435 in total taxes, or 43.5 per cent of their annual income. On the calendar, this percentage translates into a June 9 Tax Freedom Day, when Canadians start working for themselves and their families instead of government. (Source Fraser Institute)

Moreover, June 9 marks the point when the average Canadian has paid off the year’s tax load and will begin pocketing his or her own money.

The Fraser Institutes explains that tax freedom day is later this year because the average Canadian family’s total tax bill will increase at a faster rate than income. Specifically, total taxes will increase by 3.2 percent (or $1,355) over last year while income will increase by 2.1 percent (or $2,072). The $1,355 increase in the average Canadian family’s total tax bill includes increases in income taxes ($589), payroll and health taxes ($364), sales taxes ($191) and property taxes ($47). No category of taxes decreased between 2013 and 2014.

Provincial 2014 Tax Freedom Days (earliest to latest)

  • Alberta May 23
  • Prince Edward Island June 5
  • British Columbia June 6
  • Ontario June 7
  • Saskatchewan June 7
  • New Brunswick June 9
  • Manitoba June 10
  • Nova Scotia June 14
  • Quebec June 14
  • Newfoundland & Labrador June 22

The Fraser Institute has developed an online calculator to help individuals calculate their personal Tax Freedom Day.

In addition, a Tax Freedom Day infographic is available here.

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Yosie Saint-Cyr

Managing Editor at First Reference Inc.
Yosie Saint-Cyr, LL.B., is a trained lawyer called to the Quebec bar in 1988 and is still a member in good standing. She practiced business, employment and labour law until 1999. For over 15 years, Yosie has been the Managing Editor of the following publications, Human Resources Advisor, Human Resources PolicyPro, HRinfodesk and Accessibility Standards PolicyPro from First Reference. Yosie is one of Canada’s best known and most respected HR authors, with an extensive background in employment and labour across the country. Read more
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