Report: Canadian Families Spend More on Taxes Than Necessities

Report- Canadian Families Spend More on Taxes Than Necessities

Raising a family can be expensive in the modern world, and for many Canadian families, regular daily expenditures alone can sometimes create significant financial challenges. As inflation and the cost of living inevitably rise, so do the costs of housing, food, gas, supplies – making almost all aspects of taking care of yourself, nevertheless a family, costlier.

Yet, despite the increasingly expensive nature of family life, a recent study released by the Fraser Institute made a surprising discovery: the average Canadian household spent more on taxes last year than everyday family essentials.

“Many Canadians may think housing is their biggest household expense, but in fact, the average Canadian family spent more on taxes last year than on life’s basic necessities — including housing,” said Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of the Canadian Consumer Tax Index.

Over 40 per cent of family income spent on taxes

The report found that the average Canadian family earned $83,105 in 2016, and spent $35,283 in federal, provincial and local taxes. In comparison, when it came to household essentials, like housing (including rent and mortgage payments), food and clothing combined, the average family spent just $31,069.

As a result, taxes accounted for 42.5 per cent of the average family’s spending last year while basic necessities accounted for just 37.4 per cent.

“Taxes help fund important public services that Canadians rely on, but the issue is the amount of taxes governments take compared to what Canadians get in return,” Lammam said. “With more than 42 per cent of their income going to taxes, Canadians might ask whether they’re getting good value for their tax dollars.”

Although the report’s findings may come as a surprise to many regular Canadians, the findings actually follow a long-term trend of escalating taxes for families. The Canadian Consumer Tax Index, which has tracked tax data from 1961 to 2016, found that taxes typically grow faster than any other family expense. The total tax bill of the average Canadian family has increased by 2,006 per cent since 1961, while spending on food increased by 639 per cent, housing went up 1,527 per cent, and clothing rose by 677 per cent.

The increase in tax as an expense has been gradual but significant. In 1961, 33.5 per cent of the average family’s income was spent on taxes while 56.5 per cent was allocated to food, shelter and clothing. In 1981, 40.5 per cent of the average family’s income was spent on necessities while 40.8 per cent of income went to the CRA.

How to save on family essentials

Given that the Canadian economy has been showing signs of improvement as of late, the percentage of income the average family pays the government in the form of taxes looks likely to keep increasing. But there are ways to save if you do your research, especially on back-to-school items. For example, looking for discounts or coupons online or putting your credit card points to work.

The President’s Choice Financial MasterCard offers 10 PC points per $1 spent on the card, and the President’s Choice Financial World Elite MasterCard offers 30 PC points per $1 spent at participating grocery stores where President’s Choice® products are sold, on top of 10 PC points per $1 spent everywhere else. PC points can then be used towards groceries and any products at participating stores where President’s Choice® products are sold. Every 10,000 points is $10 in free groceries. 

Don’t have any of these cards? For a limited time, you can get a $100 e-gift card and up to 20,000 PC points when you sign up through and activate your card. That’s $100 in your pocket and $20 in free groceries. And since groceries are an ongoing expense, you may as well collect more points as you shop too.

Related Topics

Economic News / Lifestyle / Lifestyle News / Personal Finance / RSM News / Taxes / Your Budget

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