(June 29 – 09:20 ET) – Tomorrow is Tax Freedom Day according to the Fraser Institute.
After today Canadians will finally be working for themselves, having worked off their combined tax bill from all levels of government. The day comes five days earlier than it did last year, although it is 58 days later than it was 39 years ago. In 1961, the first year the statistic was calculated, Canadians were tax-free on May 3.
The conservative think tank says it calculates Tax Freedom Day in order to provide an easy reference point about the impact of complex tax collecting. The total tax bill that is added up to compute Tax Freedom Day includes income taxes, property taxes, and sales taxes and also includes; profit taxes, health, social security and employment taxes, import duties, license fees, taxes on the consumption of alcohol and tobacco, natural resource fees, fuel taxes, hospital taxes, and others.
“It is all but impossible for an ordinary citizen to have a clear idea of the tax demands which are imposed on them by the various taxing efforts of government. Tax Freedom Day provides clarity about the size of the tax burden,” says Dr. Michael Walker, executive director of the Fraser Institute.
By province, Newfoundlanders get off easiest with their provincial tax freedom day coming on May 30, while those in Quebec and BC must wait until July 8. Alberta comes in at June 19, Ontario is June 22, and Manitobans are free on June 27. Saskatchewan is also late at July 6.
Fraser Institute economists applaud governments for the five-day improvement, noting that it is partly a result of more prudent fiscal conduct by the various levels of government. The strong economy also helped. Looking ahead the reintroduction of indexation and announced tax cuts should help ease the tax burden. “Last year we stated that there was good reason to hope that 1998 would be the ‘high water mark’ for Tax Freedom Day in Canada. While this turned out to be too optimistic, there is considerable evidence to suggest that 1999 will be distinguished as the latest Tax Freedom Day in Canadian history,” says Joel Emes, senior research economist at the Institute.
Despite the optimism, the Institute warns that Canada and Quebec Pension Plan contributions will continue to rise through 2003, to reach their long-term steady state of 9.9% of pensionable earnings. The increase in CPP and QPP contributions between 1999 and 2000 was larger than the decrease in personal income taxes for the average Canadian family. It also complains that the rich pay an unfair share of taxes, noting that the top 30% of income earners pay 65.7% of all taxes, while only earning 58.3% of all income. The bottom 30% of all income earners pay 4.2% of all taxes and earn 9.1% of all income.
-IE Staff