Canadians celebrate Tax Freedom Day a month and a half later than the U.S.

Well, we made it – Tax Freedom Day, the day Canadians stop working for ‘The Man’ and start working for themselves.

Or at least it is according to public policy think-tank The Fraser Institute’s latest study Canadians Celebrate Tax Freedom Day, which pegs June 7 as the day the average Canadian family would shell out their hard-earned income until, supposing they were to pay the government all their taxes up front.

Based on the think-tank’s calculations, the average Canadian family will pay $45,167 in total taxes or about 42.9 per cent of its annual income of $105,236 to the government’s gamut of taxes including income, payroll, healthcare, sales, property, fuel, and “sin” taxes (things like alcohol and tobacco).

It’s two days earlier than last year’s Tax Freedom Day, though the study is quick to point out that a lot of that has to do with the fact it’s a leap year and “because Tax Freedom Day is calculated based on federal and provincial tax revenue forecasts, overly-conservative revenue estimates by governments moved the date earlier up the calendar.”

“The fact is – Canadians pay a lot of tax,” says Nathan Parkhouse, certified financial planner at Parkhouse Financial. “Tax Freedom Day is a complete misnomer… seeing how significantly all of our other endeavours are taxed, i.e. consumption tax, the tax that’s levied on manufacturers to get the products to us at the retail level, the tax on every step in the supply chain beforehand, etc…”

While the average family in some provinces tap out earlier – Alberta celebrates May 17, Saskatchewan and Prince Edward Island call June 1 Tax Freedom Day while Ontario and British Columbia mark June 5 off – others have to earn a bit longer with Manitobans being tax free June 7, Nova Scotia on June 9, New Brunswick on June 11, Quebec on June 13 and Newfoundland and Labrador working until June 14.

“I do like the fact Tax Freedom Day is a gauge of the average or mean Canadians income tax level, and at the very least it has come slightly earlier this year,” adds Parkhouse.

But still, it pales in comparison to the U.S.’s April 24 Tax Freedom Day.

“The difference between Canada and the U.S. on this particular matter is striking (and) the difference from province to province and state to state is even more so,” says Parkhouse.

He points to Tennessee where there is no personal income tax.

“Just a tax on investment income and on consumption (in the form of) sales tax,” he says. “It’s an interesting concept that I am personally behind…pay for what you earn on you investments and what you use, buy, and consume.”

On the other side of the equation, the U.S. doesn’t enjoy nearly the same government support for roads, infrastructure and essential services Canada does – one of the reasons taxes sit at 31 per cent of the U.S.’s income compared to Canada’s higher rate.

“Hopefully the trend towards infrastructure spending and increasing, not decreasing, essential services continues in conjunction with an earlier Tax Freedom Day,” adds Parkhouse. “Now that is what most if not nearly all Canadians – and Americans – would like to see.”