Taxes are the largest household expense for families in Canada
A new study by Fraser Institute(opens in a new tab), a right-leaning think tank, reveals the average household spent 43 per cent of its income on taxes alone in 2023
“It was so surprising to me the results of that study because so many of those taxes were hidden,” said financial planner and CEO of Black Star Wealth Wendy Brookhouse. “You don’t even realize they’re adding up.”
According to the study, the average family earned approximately $109,235 last year and spent $46,988 on taxes. Going back to 2000, the average income was around $54,488, with $25,259 spent on taxes. The study looked at numbers dating back to 1961, when the average income was $5,000 and taxes were $1,675 or approximately a third of earnings
“It’s not only income taxes. It’s also payroll taxes, sales taxes, fuel taxes when you’re filling up at the pump. Property taxes as well,” said Jake Fuss, fiscal studies director with Fraser Institute
The amount people spent on taxes last year is more than they spent on housing, food and clothing combined. On average, shelter cost $23,809 while food was $12,607 and clothing cost $2,514″Lives for Canadians right now are so unaffordable,” said Jay Goldberg, the interim Atlantic director for the Canadian Taxpayers Federation. “We have statistics that have come out quite recently saying that 50 per cent of Canadians are $200 away from not being able to pay their bills and this is a big reason why.”According to the study, since 1961 a family’s total tax bill has increased by 2,705 per cent, while housing has increased 2,006 per cent and food expenses have gone up 901 per centGoldberg said governments at all levels need to look at cutting taxesUntil that happens, Brookhouse said people should make sure they are getting all of their credits and deductions, and should contribute to an RRSP, no matter how small”Is it worth it having that Starbucks coffee versus putting $5 into my RRSP? These are the kinds of decisions that you have control over that you can start to take control of the numbers in your life because you can’t control the taxes,” said BrookhouseThe study also showed people spent an average of $23,317 on other expenditures, which include communications, child-care expenses, pet expenses, transportation, health care, recreation, education, tobacco products and alcoholic beverages
