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Taxes eat up 44% of income for average Canadian household: report

The Fraser Institute found the average Canadian family’s tax burden last year represented 44.2 per cent of its income. (GETTY)
The Fraser Institute found the average Canadian family’s tax burden last year represented 44.2 per cent of its income. (GETTY)

The average Canadian household spent nearly $40,000 in taxes in 2018, more than housing, food and clothing costs combined, according to a new report.

The Fraser Institute found the average Canadian family’s tax burden last year represented 44.2 per cent of its income, versus 36.3 per cent spent on basic necessities.

The authors calculated a typical Canadian household spent $39,299 in 2018 on taxes, and $32,214 on basic needs, while earning $88,865 in annual income.

“Taxes—not life’s basic necessities—remain the largest household expense for families across the country,” said Finn Poschmann, a resident scholar at the Fraser Institute, in a news release on Friday.

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The right-leaning think tank’s Canadian Consumer Tax Index is meant to demonstrate how tax bills have changed over time. It shows the portion of income devoted to taxes has swelled by nearly three-fold, adjusting for inflation, since 1961.

Taxes first overtook spending on basic necessities in the early 1980s, as governments ramped up spending and added additional services.

“Of course, taxes help fund important public services, but with more than 44 per cent of their income going to taxes, Canadians might wonder whether they’re getting good value for their tax dollars,” Jake Fuss, a Fraser Institute economist and study co-author, added in the news release.

The Fraser Institute’s assessment of household taxes is decidedly higher than other estimates, including one from the left-learning Broadbent Institute, which pegged the average family’s tax burden at 24 per cent of its income in 2017.

The Fraser Institute’s figure includes certain taxes paid by businesses, which may be baked into the cost of goods and services. The think tank does not account for how Canadian families benefit from corporate profits.

Yahoo Finance Canada
Yahoo Finance Canada

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