June 23 is Balanced Budget Tax Freedom Day in Canada

Prior to the release of the federal budget, polling revealed the majority of Canadians are concerned about the federal deficit and believe the federal government is spending too much. Given that eight provinces also plan to run deficits in 2024, Canadians are right to be concerned about the implications of government borrowing.

Earlier this month, we calculated that Tax Freedom Day fell on June 13 in 2024. This is the day in the year when the average family has earned enough money to pay the taxes imposed by all three levels of government—federal, provincial, and local. In other words, if Canadians were required to pay their taxes up front, Tax Freedom Day is the day that families get to start keeping the money they earn.

But this calculation does not consider the implications of the budgetary deficits run by governments this year. Based on budget forecasts the federal government plans to run a $39.8 billion deficit in 2024, and adding in budgetary balances from the provinces yields an expected net cumulative deficit for Canada of $69.9 billion.

Today’s deficits will be paid for by taxes, as money borrowed today must ultimately be paid back in the future, which means that the $69.9 billion in combined federal and provincial deficits for 2024 should be considered deferred taxes. To illustrate this point, we calculate a “Balanced Budget Tax Freedom Day” to show when Tax Freedom Day would arrive if Canadian governments had to raise taxes today to balance their budgets, instead of financing spending through borrowing. That day is June 23—10 days after the original June 13 estimate—representing nearly half the year.

“Balanced Budget Tax Freedom Day” also varies by province, depending on the state of government finances. The scale of deficits varies greatly between the eight provinces that are running deficits, and the only two provinces projecting budgetary surpluses are Alberta and New Brunswick.

Among those provinces running deficits, three stand out as running the largest annual provincial deficits in 2024—Quebec ($11.0 billion), Ontario ($9.8 billion), and British Columbia ($7.9 billion). While the scale of deficits in all three provinces stands out, B.C.’s deficit is particularly noteworthy given the province has a significantly smaller population than Quebec and Ontario.

Due to the combination of high taxes and the largest provincial deficit in dollar terms, Quebec has the latest Balanced Budget Tax Freedom Day this year of any jurisdiction. The average Quebec family would not earn enough money to pay its total tax bill in 2024 until July 10, meaning they would spend the entire first half of the year working for the government.

In other words, if the Trudeau and Legault governments had to raise taxes today to balance their budgets instead of financing spending with borrowing, Balanced Budget Tax Freedom Day in Quebec would arrive 13 days later than the province’s standard Tax Freedom Day.

In addition to Quebec, Balanced Budget Tax Freedom Day was 10 or more days later for five other provinces including B.C. (14 days), Ontario (11 days), Prince Edward Island (11 days), Nova Scotia (10 days) and Manitoba (10 days). As such, the tax burden for average Canadian families is expected to rise in future years to pay for today’s deficit-spending. And Tax Freedom Day will likely occur later than June 13 in subsequent years, as future generations of Canadians foot the bill for today’s spending through tax increases.

The national Balanced Budget Tax Freedom Day falls on June 23 this year, which represents nearly half the year. If Canadian governments continue to increase spending and run deficits in the coming years, average families may be working to pay their taxes until after Canada Day.