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This past Saturday, Canada celebrated its Tax Freedom Day. To those of you scratching your heads wondering if you’ve missed the opportunity to go shopping tax-free, you can think again. Not to worry, you didn’t miss any super sales this past weekend. Instead, as Wikipedia.org defines it, “Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden.”
Not quite yet at the halfway point of the year, Canada has reached its Tax Freedom Day just three days later than it did last year. Last week, QMI Agency’s Stefania Moretti wrote that “it should have come weeks later if the government were living within its means, according to the Fraser Institute, which calculates the day’s arrival every year.”
She notes that the three-day delay for this year’s Tax Freedom Day was due to Canada’s improving economy as it rebounds from the global financial crisis. She adds that the higher a family’s income is, the greater their tax burden. Fraser Institute’s senior economist, Niels Veldhuis believes that “Canadians have to have the debate about whether they are getting value for all this money we are sending to government.”
Veldhuis points out that many provinces have hiked up their taxes over the past year citing Quebec’s gas and mining taxes, British Columbia’s health premiums, Saskatchewan and Manitoba’s tobacco taxes and Nova Scotia’s increased income and sales taxes as examples.
Veldhuis estimates that Tax Freedom Day would have come 25 days later “if governments hadn’t deferred the tax burden from unprecedented spending by running deficits.” He said that the federal stimulus dollars proved to have little impact on boosting the economy. Instead, it was the private sector that most helped with the nation’s financial development.
Said Veldhuis: “So that’s one area where I think Canadians would question whether or not that money was wisely spent…Every single government across Canada, federally and provincially, is running a deficit and that of course means we are deferring some taxes into the future.”
Acknowledging, of course, that tax dollars do help to pay for certain necessities, Veldhuis still questions whether or not Canadians are getting the most out of their tax dollars. This year, the average Canadian family will pay more than 42% of their income towards taxes. This is an increase from last year.
Writes Moretti: “Ottawa estimates it will rack up a $47 billion deficit this year, much of that stemming from its two-year $19 billion stimulus package…The total tax bill will increase 3.8%, or by $1,441, between 2009 and 2010 while income will increase by just 2%.”
For the average Canadian, Tax Freedom Day essentially means that they will be taking home everything they make from this point forward for the rest of the year. Perhaps then, today should be every employee’s favourite Monday of the year!