Opinion: We’re not being taxed to death — it just feels that way
By Allan Lanthier
Do you think your taxes are too high? Well, join the club: the Fraser Institute says that nearly three-quarters of Canadians feel the same.
In addition to income tax, we pay sales taxes, property taxes and payroll taxes (such as levies for the Canada Pension Plan and Employment Insurance). Then we have invisible taxes that we pay but don’t see — “sin” taxes on liquor and tobacco, custom duties and import levies, plus carbon taxes that add to the cost of products we buy, including groceries. The Fraser Institute estimates the average family paid 45.2 per cent of its earnings in taxes and levies in 2022.
But here’s the head-scratcher. Our total taxes are not particularly high by international standards. The Organisation for Economic Co-operation and Development (OECD) reports that in 2021 Canada’s tax-to-GDP ratio was only 33.2 per cent, less than the OECD average of 34.1 per cent. Canada ranked 24th out of 38 OECD countries in terms of tax-to-GDP. Denmark had the highest ratio at 46.9 per cent, while Mexico brought up the rear at 16.7 per cent.
Canada’s personal income tax rates are out of whack
So why are we all so disgruntled? Two reasons. Canada’s personal income tax rates are out of whack. And many of us feel governments are not giving us enough value in return for the taxes and levies we pay.
Canada places greater reliance on personal income tax than other developed countries do. In 2020, 37 per cent of Canada’s taxes and levies came from personal income tax: the OECD average was only 24 per cent. And our tax rates are high. In Ontario for example, the combined federal-provincial rate is 53.5 per cent on annual income above $235,000: only four OECD member-countries have rates higher than that
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