FUSS: Canadian families must work nearly half the year to pay taxes
· Toronto Sun
While the cost of living is a huge concern in Canada, most Canadians likely don’t know that taxes remain the single largest expense for the average family.
Canadians pay many different taxes (income taxes, sales taxes, fuel taxes, property taxes, etc.), so it’s difficult to know how much you pay in total each year. While some of these taxes are visible — for example, you can check your pay stub to see how much you pay in personal income taxes — many taxes are hidden or less visible.
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To help Canadians understand how much we pay in taxes, each year Fraser Institute analysts calculate Tax Freedom Day — the day of the year when the average Canadian family has earned enough money to pay all taxes levied by the federal, provincial and local governments. In other words, if Canadians had to pay all their taxes up front, Tax Freedom Day is the day of the year you start keeping the money you earn.
This year, the average Canadian family (of two or more people) will earn $166,790 in income and pay an estimated $72,539 (or 43.5% of their income) in taxes. So, if it paid all its taxes for 2026 up front, the average Canadian family would pay the government every dollar it earns until June 9. After working for the first 159 days of the year for the government, you now get to work for yourself.
Tax Freedom Day
This year’s Tax Freedom Day of June 9 comes one day later than last year. It means the average Canadian family must work one more day to pay off its total tax bill, because the average family’s income rose more slowly (2.2%) than its total tax bill (3.0%), partly due to tax changes from governments across the country. For example, the British Columbia government increased the lowest personal income tax rate from 5.06% to 5.60% this year.
Poor fiscal management by governments from coast to coast may also increase the tax burden on Canadians in the future. For example, when governments run deficits, they must borrow money and rack up debt. Despite promising a “very different approach” to federal finances from its predecessor, the government of Prime Minister Mark Carney will run a projected $65.3-billion budget deficit this year. And when you combine every provincial government deficit across the country, you get a projected $47.8 billion . On aggregate, that’s $113.1 billion in new federal and provincial government debt, which will land squarely on younger generations of Canadians who may face higher taxes in the future to pay for today’s profligate spending.
In fact, if we factor in these federal and provincial deficits to calculate a “Balanced Budget Tax Freedom Day” — which shows when Tax Freedom Day would arrive if Canadian governments raised taxes today to balance their budgets instead of passing the burden onto younger generations — Tax Freedom Day would occur on June 25 (16 days after the original June 9 estimate).
The tax bill is expected to rise for the average Canadian family in 2026. With a June 9 Tax Freedom Day, families are working nearly half the year before they stop sending their hard-earned money to governments. And that date could come even later in future years as Canadian governments continue to rack up debt at a rapid pace.
– Jake Fuss is director of fiscal studies at the Fraser Institute