Tired of taxes? See how Canada’s tax burden ranks globally

Complaining about taxes is a national past time in Canada and there’s nothing like a fresh set of data to back up your argument, especially at tax time.

The Organization for Economic Co-Operation and Development (OECD) just released a study showing the so-called “tax wedge” is on the rise in Canada, as well as other developed countries. That’s the difference between employer labour costs and your net take-home pay.

But if you’re forced to find the bright side in the numbers, it’s that Canada’s tax burden is below the average among OECD countries and we’re way better off than some European countries such as Belgium, Germany and Austria.

According to the OECD, a single worker without children earning the average wage in Canada faced a tax burden on labour income of 31.1 per cent in 2013. That compared with the OECD average of 35.9 per cent.

In fact, Canada’s ranked 26 out of 34 countries in this category, just below the United States and slightly above Australia. (The OECD calculates the tax burden by adding up personal income tax, both employee and employer social security contributions and payroll tax, then deducts benefits as a percentage of labour costs.)

The report says the tax burden of the average single worker has fallen since 2000, when it was 32.9 per cent. Still, it was the 0.6 per cent increase since 2009 that has hit many Canadians. That’s when the government started turning over several rocks, looking for ways to find cash in the aftermath of the global financial crisis.

Canadian Taxpayers Federation (CTF) federal director Gregory Thomas says part of the burden is Employment Insurance taxes, which have been increasing while benefits are being cut.

“Government like taxing wages and payrolls because it’s easy to do,” he said. “It’s the fastest way to get government’s hand in the pockets of working Canadians.”

Thomas doesn’t see why Canadians should be taxed more heavily than countries such as Australia, New Zealand, and Korea – which are some of the countries on the OECD list with lower tax burdens.

The OECD report sliced and diced the numbers a bit further, showing the tax burden for an average Canadian couple with one income and two children fell to 18.7 per cent from 23.1 per cent between 2000 and 2013, or 4.4 per cent. Still that includes an increase of 2.1 per cent between 2009 and 2013.

The highest tax wedges for families with one income and two children were in Greece at 44.5 per cent, France at 41.6 per cent and Belgium at 41 per cent, the OECD report shows.

Meantime, New Zealand had the smallest tax wedge for these families at 2.4 per cent, followed by Ireland at 6.8 per cent and Chile at 7 per cent. The average for OECD countries was 26.4 per cent.

For more information on the report, and to compare Canada with other countries, click here.