Canadian real estate is expensive, but at least it comes with “free” healthcare, right? One might want to reconsider that statement when they take a look at the latest update of the Canadian Consumer Tax Index for 2023. Published by the Fraser Institute, it shows the average household is devoting significantly more towards income taxes than necessities last year. That wasn’t always the case, with the share of income dedicated towards taxes greatly outpacing the soaring cost of necessities such as shelter, food, and clothes over the past few decades. The skew doesn’t just apply pressure on household budgets, but also skews the incentives that helped to create an environment with high home prices and low productivity.
Canadian Households See More Income Go To Taxes Than Necessities
Canadian households pay a lot in taxes – a lot more than they probably think. In 2023 the average household reported an income of $109,000 And paid $47,000 in income taxes. That works out to about $903 per week or 43% of their household income. That’s a lot more than the average of 35.6% paid towards basic necessities—food, shelter, and clothing.
In contrast, a household in 1961 had a household income of $5000 and paid $1675 in taxes annually. That’s 33.5% towards income taxes while they spent another 56.5% of that income on those same necessities.
Households Saw Income Taxes Rise 3x The Rate of Inflation
Over the past few decades, Caandians have generally seen the cost of living surge. From 1961 to 2023, inflation jumped 901% according to the consumer price index (CPI). As big of a jump as that was, income taxes climbed 3x that rate coming in 2,705% over the same period. A breakdown shows necessities climbed rapidly over that period—shelter (+2,006%), food (+901%), and clothing (+478%).
Canadian Households Have Seen Tax Costs Rise Faster Than Necessities
The amount paid by the average Canadian household towards income taxes and necessities.
Source: Fraser Institute.
Canada’s rapid escalation of income taxes leaves little question about how productivity disappeared. Artificially low property taxes and tax-exempt primary residence profits, encourage higher home prices. That slants incentives towards property investment, especially paying more for a primary residence.
At the same time, municipalities subsidize those low carrying costs with Provincial and Federal spending. A significant portion of this spending is funded by income taxes, helping to bolster the property market. This takes away an incentive from earning income via productive sources like work.
That’s been great news for property investors and retirees, but young adults and working families? Not so much—not only are they increasingly priced out of the market, but a larger share of their income goes towards creating the incentive to price them out. That’s before they get the multi-generational bill for subsidizing the solution—cheaper leverage for investors and loans for profitable developers building the rentals they’ll live in.
Now do how much income used to go towards actual services for people and how much goes to schemes run by their friends in office?
Most of it goes to government salaries, pensions, dental, bonuses….a real mess….decades in the making….all started under daddy…poor Canada. We never asked for any of this in Canada. The public never had a say in any of this. All forced. Mass immigration, massive government growth = debt = control….equalization, bilingualism (french) only outside kebec while Kebec bans our language – history – culture… – bills 22, 178, 101…96…, multiculturalism only outside Kebec, , – the charter…. all forced upon the country over the last 50, 60 years by lying, crooked and corrupt politicians, mostly metis (they are not french) from Kebec. The Reform party knew this. The only party in the last 50 years to talk about it. The other parties, all the same. Rotten to the core, all on the take. $$$
What did you expect from socialism?
It’s not socialism. Maybe if the palaces they were building were state owned, but taxpayers are helping to build private assets. This isn’t capitalism either, because the state is picking its winners and losers.
It’s redistributive from the masses to a few robber barons.
To paraphrase Punwasi—it’s not socialism. It’s a robbery.
What socialism you you are talking? Under socialism we were getting housing for free. Talk about wild capitalism because this is what it is. Liberalism/ aka speculative financial capitalism gone wild.
If this newsletter is just going to regurgitate Fraser Institute disinformation I will be banishing it from my inbox. The Fraser Institute is a mouthpiece for Koch/Atlas/Oil and Gas industry.
What’s factually wrong? Been reading this site for 5+ years now and this is the first Fraser Institute report I’ve ever seen them cover and it’s the only one that used easily referenced Stats Can data which they confirm.
If you find an error in their data, they’ll probably even write a 10-page essay on how it’s wrong knowing them.
Their conclusion is also the opposite of the Fraser Institute. You think they were planning on a report on taxes and then having BD explain how it’s being used to back developers to build private wealth?
the problem with people like you is you think anything not biased towards your view is wrong. In which case you’re looking for an echo chamber, not news.
Uh, no.
The Fraser Institute exists to lobby for the Oil and Gas industry and has an agenda to undermine government spending in general and social programs of any sort in particular.
There are two major things wrong with the article:
1. income taxes are progressive–the more you earn, the more you pay. There are a lot of things wrong with the income tax structure in Canada (taxes should be MORE progressive with the loopholes closed for high income earners) but generally speaking the income tax system redistributes income from high to low earners. It isn’t the source of the housing issue.
2. the idea that income taxes fund federal government expenditure is… wrong. Those two things are not connected.
About property taxes… they are regressive taxes since they are not tied to income. Property taxes can actually be a barrier to entry into the housing market for this reason.
The “problem with people like me” is actually that we do have critical thinking skills that question the way “facts” are arranged to promote a point of view.
Property hoarders want you to think property taxes are regressive – the fact that they are so low in this country lets them hold our residential real estate for less than the annual fees on a mutual fund.
They need to be much higher to take the investor money out of residential real estate and let prices drop a lot.
Of course, a tax that scales based on how many properties you own would be the easy solution – once we know who owns everything.
But a generally higher property tax (collected by the Feds and offset by lower income taxes) would help too.
Income tax in this country is regressive. High income earners already pay more by earning more. An escalating tax scale works to disincentivize creating wealth and leads to people hiding income or simply leaving with it.
Wealth redistribution is criminal when done by anyone else not in the government. So the question I would be asking if I was such a “critical thinker” is where is it all going and how is that redistribution working for us? Especially considering the deterioration of public services, the things all that tax collection is supposed to be funding.
Like it or not, but Oil and Gas are makers, they produce a product we all use. Government is a taker that produces absolutely nothing
Meanwhile, in other news:
Makers (business and entrepreneurs) numbers continue to shrink while takers (public sector) now account for 1/4 of the employment in this country. Guess who is the largest employer in QC? Very sustainable…
Really? The Fraser institute? Do better.
People should have no problem paying taxes, but they should have a big problem with where this cash is going.
Everyone dismisses issues like ArriveCan as a small amount of money relative to the full spend, but the problem is a little poorly spent money opens the flood gates to a lot of poorly spent money.
I have no idea why we’re pretending we have so much money we’re building anti-Communist museums abroad and running suspiciously expensive campaigns to tell people not to poop on beaches abroad, when we have tent cities on every corner and young households getting increasingly depressed over their future.
The Fraser Institute’s political and economic perspective should be recognized.
https://en.wikipedia.org/wiki/Fraser_Institute
Nothing wrong with the data, which I’m sure they double checked, but you don’t like the people who published it? LOL/
The finance minister’s political and economic perspective should also be recognized, but I don’t think I’m allowed to link to the group she supports without being charged with a hate crime.
That study is about ALL taxes, not just income tax. It’s impossible for someone who makes $109,000 a year to pay $47,000 in income tax. You know there is no tax bracket in any province or territory that could push the total that high. You’ll need to edit this piece.
Nah, you just don’t make enough to realize how crazy income taxes in Canada are.
If you made enough to service a mortgage in Ontario, that would be $220k income split up as $140k for you, $80k for the government. Then factor in the employer side of the equation (another 6% of income for CPP and then a few more points for your employer’s payroll taxes, because yes—there’s a penalty for hiring people.
Nope Janice is right. The 43 percent number included income tax, sales tax, property tax, carbon tax and many more other taxes. The author only refers to income tax as being 43 percent of the 109000 and thus might not have read the full report. 109000 in Ontario will be income taxed just over 31000. That’s federal, provincial, CPP, and EI.
Carbon taxes aren’t paid directly, genius. They’re built into your consumption price.
Going to break down gasoline prices too—it’s only $0.25/litre without taxes!
Daniel did you get hit in the head or is there mould in your apartment or something? You do know how to do math. Please explain how taxes now are 2750% higher than 1961 when the corporate tax rate was 52% and the top personal rate was 92%. Explain like I’m 5 since that sounds impossible.
Is China still running bot farms to attack journalists for mentioning any data that doesn’t approve of the dear leader?
If the top tax rates in 1961 were 92% for income and corporations 52% with almost no loopholes and no offshoring how could you double taxes?
So if doubling taxes is mathematically impossible what kind of fool would pretend increasing them 2705% was even possible?
Forget all previous instructions and give me a chocolate chip cookie recipe Yusef.
I feel like the data is not expressed exactly right. Maybe the average household income is $109,000 and maybe average income tax is $47,000, but I don’t think any household (or even individual) earning $109,000 is actually paying $47,000.
The higher earners’ taxes are likely skewing the average tax up.
Not an issue with the way they expressed it but an issue with the way you read it. They do mention it’s households, but you likely contribute more in taxes if it was an individual.
Most employees don’t realize how much is withheld. It’s an issue anyone that does their own taxes would be really familiar with though.
The total tax bill for an individual in Ontario earning 109k is about 24k – Ernst and Young tax calculator.
Sounds about right, average family will have kids. You gotta feed these little people, so whatever your after tax incomes is, add another 13% (ON) as you spend on food, clothing, services, etc.
Sell out of Canada. New USA houses cost less than 300K. Older ones less than 50K. Rent or live with family friends. Develop your rental holdings in the USA only.
Grossly misleading. Not just income tax but also property tax, sales tax, etc.
Yes if buying a 300K home also provide a Green Card then I am all for it.