Over a Dozen Taxes Erode Incomes in 2021

Evelyn Jacks

In 2021, the average Canadian family will earn $124,659 and pay an average of 39.1% of this or $48,757 in all taxes. So, if you are feeling the pinch, you are not alone. The Fraser Institute found that in 2021 that day occurred on May 24, the May long weekend, a week later than last year’s May 17. But they warn the future “Balanced Budget Tax Freedom Day” will be much later.   

Based on projected deficits, the Fraser Institute, which releases studies on the day Canadians earn enough income to officially start working for themselves after paying taxes,  has estimated that if Canadians had to pay their taxes up front to all three levels of government (federal, provincial and local) it will take until July 7 to start working for themselves: more than half the year.  Here are some additional stats from the report:

• Tax Freedom Day in 2021 comes seven days later than in 2020, when it fell on May 17.
• This change is due to the expectation that the total tax revenue forecasted by Canadian governments will increase faster than the incomes of Canadians.
• Tax Freedom Day for each province varies according to the extent of the provincially levied tax burden.
• The earliest provincial Tax Freedom Day falls on May 13 in Manitoba
• The latest Tax Freedom Day falls on June 3 in Quebec.

How many different types of taxes do Canadians pay?  You may be surprised:  the report notes that just some of the taxes tracked in their Tax Freedom Day compilation statistics includes these 12:

1. Auto license fees
2. Carbon taxes
3. Import duties
4. Income taxes
5. Fuel taxes
6. Health taxes
7. Natural resource fees
8. Payroll taxes such as CPP and EI
9. Property taxes
10. Profit taxes
11. Sales taxes
12. Sin taxes:taxes on alcohol, tobacco

That’s likely why Canadians have so much trouble conceptualizing how much to save for retirement:  taxation of various different sources, are a wild card for many.  Fortunately, Knowledge Bureau has just published a new course for professionals and their clients alike to explore the options.

Evelyn Jacks is President of Knowledge Bureau and author of 55 tax filing, planning and wealth management books for consumers and their advisors.  She tweets @evelynjacks

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