‘Tax Freedom Day’ Arrives the Latest in Newfoundland and Labrador: Study

Ships are seen docked in the St. John's Harbour in St John's, Newfoundland and Labrador, Canada, on Oct. 17, 2018. (Reuters/Chris Wattie)

Canadians in Newfoundland and Labrador will have to work the longest into the year and forfeit the most earnings to arrive at the day they can call their paycheque their own, according to an analysis from the Fraser Institute.

“This year, people in Newfoundland and Labrador celebrated Tax Freedom Day on June 26, later than every other Atlantic province and 12 days later than the last pre-COVID Tax Freedom Day in 2019 (June 14). In other words, Newfoundlanders and Labradorians before the pandemic were free from taxes almost two weeks sooner than today,” the Institute said in a July 21 release.

The Institute’s assessment of “Tax Freedom Day” marks the moment in the year when the typical Canadian household has earned sufficient income to cover the taxes levied by the three tiers of government: federal, provincial, and municipal.

Every year, the Fraser Institute computes Tax Freedom Day to assess the comprehensive measure of the total tax burden on the average Canadian family.

Newfoundlanders and Labradorians are subject to a significant annual tax burden including sales tax, carbon taxes, property taxes, and a variety of other taxes in addition to income tax.

Research published by the Institute says the average family in the province (of two or more people) with earnings of $117,564 will pay approximately $56,588 total in taxes—or 48.1 percent of their income in 2023.

“If this family paid all taxes upfront, they would pay the government every dollar earned until June 26. In other words, after working the first 175 days of the year for government, only then can the average family in Newfoundland and Labrador start working for themselves,” the release said.

Newfoundland and Labrador have some of the highest marginal income tax rates in North America within a variety of income brackets.

“At $50,000 of income, for example, the province’s combined provincial and federal tax rate is 35 percent, fourth highest among all provinces and U.S. states. This relatively high tax burden, as well as limited income growth, is part of the reason why the province’s Tax Freedom Day falls 12 days later than Alberta,” said the release.

The province’s residents also face the highest personal burden in the nation in interest on the provincial debt as a result of previous expenditure projects.

“Additionally, because of past spending programs, residents of the province have the biggest personal burden in the country when it comes to interest payments on the provincial debt ($2,047 per person). This accounts for almost 11 percent of the province’s total revenue,” the Institute said.

Instead of borrowing money to pay for their expenditures, if the federal and provincial governments increased taxes in order to balance their budgets, the province’s Tax Freedom Day would fall on July 5—nine days later, according to the study.

“Simply put, residents of Newfoundland and Labrador face a significant tax burden on a yearly basis. Until governments restrain spending and lower taxes, residents of the province will continue working nearly half the year for the government before keeping some of their own money. Changing this dynamic should be a priority for the Furey government,” said the Institute.