A recent report by the Fraser Institute, a think tank known for its conservative perspective, highlights that the average household allocated 43 percent of its income to taxes in 2023. Financial planner and CEO of Black Star Wealth, Wendy Brookhouse, expressed surprise at the findings, noting that many of these taxes are not immediately obvious to individuals. The swelling influence of hidden taxes is often miscalculated, she said.
The report reveals that the typical family earned about $109,235 last year and spent $46,988 on various taxes. Comparatively, in 2000, the average household income was $54,488, with taxes totaling $25,259. The study also traces data back to 1961, when the average income was $5,000 and taxes amounted to $1,675, which represented roughly one-third of earnings.
Jake Fuss, Director of Fiscal Studies at the Fraser Institute, pointed out that the tax burden extends beyond just income taxes to include payroll, sales, and fuel taxes, as well as property taxes. Last year, households spent more on taxes than on housing, food, and clothing combined. Specifically, shelter costs an average of $23,809, food $12,607, and clothing $2,514.
Jay Goldberg, Interim Atlantic Director for the Canadian Taxpayers Federation, commented on the growing monetary strain on Canadians. He cited recent statistics showing that half of Canadians are just $200 away from financial instability, attributing this in part to high tax levels. The study indicates that since 1961, the total tax bill for families has surged by 2,705 percent, while housing costs have increased by 2,006 percent and food expenses by 901 percent. Goldberg advocates for tax reductions across all government levels.
In the meantime, Brookhouse suggests that individuals focus on maximizing available tax credits and deductions and consider contributing to an RRSP, even in small amounts. Small financial decisions, like choosing between a daily coffee and contributing to your RRSP, can make a difference, especially when managing a tax burden you can’t control, she advised. Additionally, the report notes that households spent an average of $23,317 on other expenses, including communication, child care, pet care, transportation, health care, recreation, education, and alcohol and tobacco products.
