Tax Freedom arrives a little later

Monday June 6 will see the newly minted Conservative government table the federal budget for the second time this year, but it also marks another milestone: Tax Freedom Day.

Every year the Fraser Institute calculates the day when the average Canadian will have paid off their tax burden for the year, with earnings from the remainder of the year going to their personal bottom line.

This year, the occasion comes two days later than in 2010.

“Finance Minister Jim Flaherty, who coincidentally is scheduled to deliver the federal budget on Tax Freedom Day, should put forth an aggressive plan that balances the budget within two years through spending cuts,” said Niels Veldhuis, Fraser Institute senior economist. “This would provide the fiscal room for a multi-year plan to reduce taxes.”

The alternatives, he says, would be to either run deficits or raise taxes, which would result in Tax Freedom Day being pushed back by 16 days if the government opted to pay as it goes.

“Today’s deficits must one day be paid for by taxes,” Veldhuis says. “The longer the government delays balancing its books, the more likely it is that Tax Freedom Day will fall later in the year.”

The Fraser Institute calculates the average family will earn $93,831 from all sources in 2011, and that their total tax bill will amount to $39,960, or 42.6% of income.

Of course, not all provinces enjoy Tax Freedom Day at the same time. Albertans have been working for themselves since May 18, while PEI and New Brunswick residents had their tax bill paid by May 27 and May 31, respectively.

June 1 marked Tax Freedom Day in Manitoba, and Ontario’s came June 4. Saskatchewan’s and British Columbia’s land on the national average of June 6, while Nova Scotia’s comes a day late. Quebecers will have their taxes paid by June 10, while Newfoundlanders and Labradorians will be paying taxes until June 19.

Before you cry for the youngest province, however, bear in mind that their late Tax Freedom Day is a result of resource royalties being included in the tax calculation. If you exclude these revenues, then Newfoundland and Labrador’s Tax Freedom Day came 26 days earlier, while Saskatchewan’s came 10 days sooner. Alberta’s would be a week earlier and British Columbia’s would be three days sooner.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.