A reality check on "Tax Freedom Day"




New report shows that the average family tax rate is half what the Fraser Institute claims

 OTTAWA - Every June, the Fraser Institute proclaims a "Tax Freedom Day" to make the misleading claims that the average Canadian family pays a tax rate of over 40 per cent and that Canadians face an ever growing tax burden. A new study conducted for the Broadbent Institute  by Richard Shillington and Robin Shaban entitled The Brass Tax: Busting Myths About Overtaxed Canadians, provides compelling evidence that the Fraser Institute’s findings are problematic and paint a deceptive picture of typical Canadian tax rates. 

“Contrary to popular opinion, tax rates in Canada are actually comparatively low. Only 2 per cent of working Canadians pay more than 30 per cent in income taxes. In fact, the typical rate  for middle income Canadians is between 10 and 19 per cent. Only 20 per cent of working Canadians pay more than 20 per cent of their income as income taxes,” said Richard Shillington.

In reality, the average tax rate is only about half what the Fraser Institute claims. Employing more accurate statistical methods, Shillington and Shaban find that the effective tax rate - including income, payroll, and commodity taxes - for the typical Canadian family is actually 24 per cent.  More pointedly, the typical effective income tax rate for a Canadian family is only 11 per cent — a far cry from the 40+ per cent claimed by the Fraser Institute.

As the debate about the need for tax reform continues, the report demonstrates that far from overtaxing, Canada's ratio of tax revenue to GDP is lower than that of most OECD countries. It also busts the pervasive myth that the wealthy are paying higher tax rates than ever and shows the income tax rate for the top one per cent has, in fact, been falling since 2000.

“The revenue from taxes is what pays for vital public services such as healthcare, education and infrastructure,” said Rick Smith, Executive Director of the Broadbent Institute. “Leaving the myth of a high tax rate unchecked gives Canadians the impression that taxes are an unreasonable burden. This not only undervalues public services, it undermines our ability to invest in programs that are key to the well-being of all Canadians.”



For more information, please contact 

Barbara Hayes, Communications Manager, [email protected]