May 19 is Tax Freedom Day—but there’s no reason to celebrate

Tax Freedom Day: 2020 Report

Summary

• Tax Freedom Day is the day in the year when the average Canadian family has earned enough money to pay the taxes imposed on it by all three levels of government (federal, provincial, and local).
• The total tax bill of the average Canadian family, which includes income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, carbon taxes, and import duties, to name a few, is estimated at $43,681 for 2020.
• If the average Canadian family had to pay its taxes up front, it would have worked until May 18 to pay its total tax bill. This means that Tax Freedom Day falls on May 19 this year.
• Estimates of income and total taxes for average Canadian families have been significantly affected by the economic response to COVID-19. When the economy slows and incomes decline, an average family’s tax burden tends to be reduced to a greater extent than its income.
• There are several reasons for this including Canadians being bumped into lower income tax brackets due to falling incomes and reductions in sales taxes paid due to reduced consumption. As a result, Tax Freedom Day in 2020 is expected to come 20 days earlier than in 2019, when it fell on June 8.
• Canadians are right to be thinking about the tax implications of the $315.2 billion in projected federal and provincial government deficits in 2020. For this reason, we calculated a Balanced Budget Tax Freedom Day, the day on which average Canadians would start working for themselves if governments were obliged to cover current expenditures with current taxation. In 2020, the Balanced Budget Tax Freedom Day arrives on July 26.