Tax Freedom Day in Nova Scotia—not much to celebrate

Of course, Nova Scotians pay many forms of taxes including personal income taxes, sales taxes, property taxes, gas and carbon taxes. With so many different forms of taxation, it can be hard to figure out exactly just how much we pay over the course of a year. Fortunately, a concept known as Tax Freedom Day sheds light on this important question.

Tax Freedom Day is the day in the year the average family in Novia Scotia has earned enough money to pay all taxes imposed by the federal, provincial and local governments. In other words, If Nova Scotians paid all their taxes up front beginning January 1, they would have to pay every dollar earned until Tax Freedom Day.

In 2022, Nova Scotians celebrated Tax Freedom Day on June 13. This is the third-latest Tax Freedom Day in Canada, behind only Newfoundland and Labrador and Quebec, and one of the latest ever experienced by the province and 33 days later than the earliest Tax Freedom Day in 1981. In other words, Nova Scotians of the past were free from taxes more than a month sooner than today.

So much do they pay?

A study published by the Fraser Institute estimates the average Nova Scotia family (two or more people) earning $107,370 will pay $47,897 in total taxes—or 44.6 per cent of their income in 2022. If this family paid all taxes for 2022 upfront, they would pay the government every dollar earned until June 12. After working the first 163 days of the year for the government, only then can the average family in Nova Scotia start working for themselves.

Moreover, the tax bill (again, for average families) in Nova Scotia increased by $2,000 this year while income only increased by $486. In other words, their tax bill has increased more than four times higher than their income.

It’s also worth noting that Nova Scotia has some of the highest personal income tax rates in North America (measured by marginal tax rates) across a variety of income levels, while also taxing high-income earners at some of the highest rates in Canada. This helps explain why Nova Scotia has a Tax Freedom Day nine days later than Manitoba (the province with the earliest Tax Freedom Day).

Finally, the Nova Scotia government projects budget deficits this year and at least the next three years. Deficits today will likely result in higher taxes in the future. To help appreciate the size of the debt burden being passed on, the study also calculates a “balanced budget” Tax Freedom Day for Nova Scotia. That is, if the federal government and the provincial government had to raise taxes today to balance their budgets—instead of financing their spending by borrowing—Tax Freedom Day in Nova Scotia would fall 16 days later on June 29.

With Tax Freedom Day in Nova Scotia falling six days later than last year and weeks later than 2020, the burden of taxation is clearly mounting on families. Unfortunately, instead of relief, families in Nova Scotia can only expect a later Tax Freedom Day in the future.