In 2017, Canada’s Tax Freedom Day was June 9, two days later than in 2016.
Compared with the U.S. date of April 19 and Australia’s April 13, it turns
out we work the equivalent of almost two months longer to pay all our taxes
– federal, provincial, and municipal – and that’s not likely to change
According to the Washington, D.C.-based Tax Foundation, a think tank that
tracks Tax Freedom Day down south, Americans will pay $3.4 trillion in
federal taxes and $1.8 trillion in state and local taxes, for a total bill
of $5.2 trillion, or 30% of the nation’s income in 2018. But the American
Tax Freedom Day has come three days earlier than in past years thanks to
recent tax reforms.
Meanwhile, back home in Canada, the
Fraser Institute, which publishes Canada’s Tax Freedom Day, has estimated that all
households will pay over $2,000 more in taxes each year going forward,
starting in 2019. It found, “…when looking at all 2.988 million families
with children in Canada (excluding those in Quebec), 2.756 million, or
92.2%, will pay higher taxes - $2,218 more, on average, each year. Indeed,
once the increase in CPP payroll taxes is fully implemented, nearly all
Canadian families – regardless of where they stand in the income
distribution – will pay higher taxes.”
The federal government appears to concur. Its largest revenue line item is
personal taxes, but due to a labor force slowdown that will result from
large numbers of boomers retiring over the next decade, it will be
difficult to maintain the current tax base.
The Finance Department has noted in a long-term forecast, issued on
December 22, 2017, that “no single initiative can guarantee sustainable
growth in our prosperity…(but) in particular, improving the economic
participation of groups traditionally under-represented in the labour
market, including women, Indigenous peoples, older workers, newcomers, and
persons with disabilities, is key to Canada’s long-term fiscal and economic
This year, Tax Freedom Day once again fell well into the first week of
June, but with a declining population and all levels of government carrying
increasing debt into a significant demographic reduction, Tax Freedom Day
could be pushed out even further into the summer as time goes by.
Sadly, for many Canadian households, that means less money available for
retirement savings. For these reasons, it is important to find ways to
invest sooner rather than later. With an eagle-eye to tax efficiency, money
can be freed up for saving and investing, and investment performance can
also be propelled forward. Be sure to see a qualified financial advisor,
such as a
Real Wealth Manager, for help in developing and securing a well-rounded family wealth
Also, Canadians looking to expand their financial literacy and make
tax-efficient decisions at all life stages should pick up a copy of my
Essential Tax Facts.
© 2018 The Knowledge Bureau, Inc. All rights reserved. Reprinted with
Evelyn Jacks is the founder and President of Knowledge Bureau, which
brings continuing financial education in the multiple areas of
specialization to advisors and their clients. She is the author of 52
books on tax and wealth planning. This article
originally appeared in the
Knowledge Bureau Report. Follow Evelyn Jacks on Twitter
@EvelynJacks. Visit her blog at www.evelynjacks.com.
Evelyn Jacks’ latest book,
NEW ESSENTIAL TAX FACTS: How to Make the Right Tax Moves and Be
Audit-Proof, Too is available now.
Notes and Disclaimer
The foregoing is for general information purposes only and is the opinion
of the writer. No guarantee of investment performance is made or implied.
It is not intended to provide specific personalized advice including,
without limitation, investment, financial, legal, accounting or tax advice.