The average Canadian family spent a lower percentage of its total yearly income paying for necessities – housing, food and clothing – than it did in 1961, according to a Fraser Institute report released August 24.
Last year, the average family earned $83,105. Of this, $31,069, or around 37%, went to necessities. By comparison, in 1961, necessities ate up 56.5% of the average Canadian family’s income, meaning Canadians are now spending less of their incomes on necessities.
On the other side of the coin, the percentage spent on taxes has increased over this period. In 2016, about 42.5% of income went to taxes, compared with 33.5% in 1961. The increase in the amount paid for tax is more than cancelled out by the drop in what is paid for necessities, however; the total spent for necessities plus taxes was around 80% in 2016, compared with 90% 55 years ago.
The study pointed out the average family spent, in 2016, nearly double the percentage of its yearly income on paying for housing that what it paid for tax. Last year, $35,283, or just under 42.5%, went toward tax. The amount spent on housing was just under $18,400, or 22.1%.
“Many Canadians 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 Fraser Institute director of fiscal studies and study co-author Charles Lammam.
The Fraser Institute said the increase in the total tax bill worked out to 2,006%, while increases in housing, clothing and food were 1,527%, 677% and 639%, respectively. Taking inflation into account, the amount spent on taxes has increased 157.6% over this period.
While the increase in the percentage of taxes paid may appear alarming, the study did not consider whether the value-for-money of the taxes paid increased or decreased for Canadians.
One major factor to consider is Canada’s national health care act did not start until 1968. A request to the Fraser Institute for any data regarding the percentage of income spent on health care in 1961 compared with 2016 was not immediately answered by press time.
For the purpose of the study, the Fraser Institute calculated total taxes by including income, payroll, health, sales, property, liquor and fuel taxes.
@EmmaHampelBIV
