Most Canadians feel the average family is over-taxed

Commentary
By Jake Fuss

Canadian families pay a lot of taxes to their federal, provincial and local governments — income taxes, sales taxes, fuel taxes and many others.

A 2022 study published by the Fraser Institute found that in total the average Canadian family paid 45 percent of its income in taxes.

But how do Canadians feel about this tax burden?

According to a new poll, 74 percent feel the average family is over-taxed. Conducted by Leger and commissioned by the Fraser Institute, the poll surveyed 1,554 respondents spanning all age groups and income levels across Canada (it was administered January 20-22 and is considered accurate 19 times out of 20).

And yet, lower taxes seem not to rank high on the agenda of most governments across the country as we enter budget season.

In 2015, the Trudeau government did reduce the second-lowest income tax rate from 22 percent to 20.5 percent. But the vast majority of families targeted for this tax relief now pay higher federal income taxes than before because the government has also eliminated a series of tax credits — for income splitting for couples with children, for children’s fitness and art, for public transit, for education and for textbooks. For most families, the value of the eliminated tax credits exceeded the gains from the tax rate reduction, resulting in a net increase in their personal income taxes.

But regardless of their personal situation, most Canadians want tax reform. The same Leger poll found that fully 80 percent of Canadians believe the average family should pay 40 percent or less of its income in total taxes. And the majority of respondents (52 percent) believe the average family should pay 25 percent or less of its income in total taxes. That’s fully 20 percentage points less than the 45 percent the average Canadian family currently pays.

There’s clearly a huge gap between what the average family does pay in total taxes and what Canadians believe the average family should pay.

The other important question, of course, is whether we get value for all the taxes we pay. After all, it’s one thing to pay high taxes and get high value from the services provided but quite another to pay high taxes for poor services.

According to the poll, nearly half (44 percent) of Canadians feel they receive poor or very poor value for the services they receive from the government, such as health care, education, policing, roads and national defence. In contrast, only 16 percent of Canadians believe they receive good or great value from government services, while fewer than three in 10 (just 28 percent) believe they receive satisfactory value. Respondents in Atlantic Canada, Alberta and British Columbia were most likely to say they received poor value for their tax dollars while respondents in Ontario were least likely.

Canadians are not thrilled with the quality of services provided by governments, and there’s clearly a desire for tax reductions. Governments across the country should pay close attention as they prepare to release their 2023 budgets.

Jake Fuss is the Associate Director, Fiscal Studies, Fraser Institute

Key Findings

• As the total tax bill continues to rise for the average Canadian family, it’s critical to better understand the opinions of Canadians on both their tax burdens and the value of services they receive from governments in return for their tax dollars.
• The Fraser Institute commissioned a poll from Leger in early 2023 that surveyed 1,554 Canadians about their opinions on the tax burdens imposed on families.
• There is a large discrepancy between what the average family actually pays in total taxes versus what Canadians believe the average family should be paying.
• 74% of Canadians surveyed feel that the average family is being over-taxed by the federal, provincial, and local governments.
• 80% of Canadians support the average family paying 40% or less of their income in total taxes to all levels of government. Over half (52%) of Canadians believe the average family should pay 25% or less of their income to governments.
• Only 6% of Canadians expressed support for the idea that the tax burden should represent more than 40% of the average family’s income. This is especially interesting considering that the average Canadian family paid 45.2% of its income to the federal, provincial, and local governments in 2022.

Nearly half (44%) of Canadians feel they receive poor or very poor value from the services they receive from governments like health care, education, police, roads, and national defence.

Only 16% of Canadians believe they are getting good or great value from the services they receive from governments.