Canada’s Tax Freedom Day Falls on June 19 This Year: Think Tank

Canada’s Tax Freedom Day Falls on June 19 This Year: Think Tank
A file photo of a Canadian dollar coin.(Mark Blinch/Reuters)
Marnie Cathcart

Tax Freedom Day in Canada falls on June 19 this year, according to the Fraser Institute.

Tax Freedom Day refers to when Canadians would theoretically start working for themselves if they paid all their taxes to the government up front starting on Jan. 1.

“If the average Canadian family had to pay its taxes up front, it would have worked until June 18 to pay the total tax bill imposed on it by all three levels of government (federal, provincial, and local),” the institute said in a June 19 news release accompanying the full report.

“This year, it comes eight days later than in 2019, the last year before the pandemic, and four days later than 2021 when it fell on June 15,” said the report. The tax burden equals more than five months of income earned, according to the Institute.

In 2023, the average Canadian household will earn $140,106 in income, and have to pay an estimated 46.1 percent of that, $64,610, in taxes to the government, according to the report.

Each year, the Fraser Institute calculates Tax Freedom Day to shed light on Canadians’ overall tax burden.

‘Hidden’ Taxes

The institute said that it’s difficult for ordinary Canadians to find out how much cumulative tax they pay. It said that while most households can figure out how much income tax they pay from their paystubs, there are a number of other taxes that are not so obvious, for example, the “hidden” taxes built into the price of goods and services.

“If Canadians paid all their taxes up front, they would work the first 169 days of this year before bringing any money home for themselves and their families,” said Jake Fuss, associate director of fiscal studies at the Fraser Institute.

The think tank provided a breakdown of the typical total tax bill, with 15.3 percent going to income taxes, 9.7 percent allocated to payroll and health taxes (including the Canada Pension Plan), and 6.8 percent to sales taxes like GST.

The average family also pays 3.4 percent of their income to property taxes, 5.4 percent to profit taxes, 1.7 percent to “sin” taxes (for example, on tobacco and alcohol), and 1.4 percent to fuel, vehicle, and carbon taxes. An additional 2.4 percent goes to other taxes, for a total of 46.1 percent of income going to the government.

There are import duties, natural resource fees, excise taxes, motor vehicle license fees, and a host of other levies, notes the report.

Historically, the earliest Canadians celebrated Tax Freedom Day in the last 13 years was on May 29, 2020. In all other years since 2010, Tax Freedom Day came in June.

“Tax Freedom Day in 2023 comes one day earlier than in 2022, when it fell on June 20. This change is due to the expectation that the incomes of Canadians will increase faster than the total tax revenues forecasted by Canadian governments,” said the report.

The Fraser Institute warns that the tax burden could become more substantial as time goes on.

“Canadians should also be worried about the $47 billion in deficits the federal and provincial governments are forecasting this year, because they will have substantial tax implications in future years,” said the news release.

There is some variation in when Tax Freedom Day comes for each province, depending on the local and provincial taxes levied. For example, Manitoba households pay their tax burden by June 6, while Prince Edward Island and British Columbia finish on June 9.

New Brunswick can celebrate on June 12, Alberta on June 14, and Ontario and Nova Scotia both have their day on June 18. Saskatchewan comes on June 22, while Newfoundland and Labrador, and Quebec, will work until June 26 and June 30 respectively.