Taxes surpass housing as main family expense

By Joel Ceausu on August 20, 2014

If you are an average Canadian family, you need not worry anymore about government picking your pocket: you now need to be concerned about your pockets.

“If you asked people to name their household’s biggest expense, many would likely say housing,” says Charles Lammam, co-author of the Fraser Institute’s Canadian Consumer Tax Index. “In reality the average Canadian family spends more on taxes than all basic necessities, including housing.”

The study found that the average Canadian family earned $77,381 and paid almost 42 percent – $32,369 – in total taxes, compared to 36.1 percent for food, shelter and clothing combined. Total taxes represent visible and hidden taxes paid to federal, provincial and local governments, including on income, payroll, health, sales, property, fuel, vehicle, imports, alcohol, tobacco and more. And this despite $30 billion in middle class tax reductions by the federal government over the past five years.

Since 1961, the average Canadian family’s total tax bill has increased by a stunning 1,832 percent, says the report, dwarfing increases in shelter (1,375 percent), clothing (620 percent) and food (546 percent). “With more money going to government, families have less to spend on things they care about, to save for education and retirement, and pay down household debt,” said Lammam. “With almost 42 per cent of income going to taxes, Canadians should ask whether they get the best value for their tax dollars.”

That growing claw back of disposable income by the long arms of government may be partly responsible for the diminishing tendency of Canadians to report tax fraud. The Fraser report comes just weeks after a Leger poll conducted for H & R Block Canada, which found more than half of Quebecers (52 percent) would not report a tax cheat to the Canada Revenue Agency, compared to 45 percent of other Canadian who remain mum on tax evasion.

“Despite measures put forward by the CRA to report tax fraud, it does not seem enough to encourage people to report,” said Caroline Battista, senior tax Analyst at H & R Block. “You will get money for your tip, but only when the fraudster is convicted, which can take years.”

Today some 58 percent of Canadians feel we shouldn’t pay cash to avoid taxes, although 53 percent consistently state they would be willing to do so. Clearly some are more malleable than others, with 17 percent of us freely admitting to purposely concealing income to avoid paying taxes.

It seems we are less sympathetic however, of small business owners who use software to eliminate sales records and avoid tax, with nearly 80 percent expecting these business owners to face criminal prosecution. That righteousness may stem from a more direct interaction with restaurant or shop owners taking taxes from consumers then lying to avoid paying them forward.

Wage and tip earners get a more sympathetic ear from the national tax-evading zeitgeist, with a full 46 percent of Canadians feeling that tips should not be considered as income and reported as such.

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