If you’ve ever watched the Price is Right on television, you might remember a game played on it, called Now & Then. The game consisted of every day products and contestants would need to guess if the price was now or then (20 years prior). It always seemed to be a shock to see how much prices have increased over a certain span of time and as we will see today, taxes have also increased, but by how much? Let’s take a look.

The Frasier Institute, who prepares the Canadian Consumer Tax Index that tracks the total tax bill of the average Canadian family, did a study from 1961 to 2021. What they have found is shocking. Including all types of taxes, the average tax bill has increased by 2,440% since 1961.

Not surprised? Here is a comparison to other expenditures from 1961 to 2021 by Canadians to get perspective:

• Shelter – Increased by 1,751% 
• Clothing – Increased by 643%
• Food – Increased by 790%

What does this mean? Quite simply, taxes have grown much more rapidly than any other single expenditure for the average Canadian family. Taxes have also outpaced the Consumer Price Index (CPI) (802%) which represents changes in prices as experienced by Canadian consumers. It measures price change by comparing, through time, the cost of a fixed basket of goods and services.

If you feel like you are spending more on taxes than basic necessities, you would be right. The average Canadian family now spends more of its income on taxes (43.0%) than it does on basic necessities such as food, shelter, and clothing combined (35.7%). By comparison, 33.5% of the average family’s income went to pay taxes in 1961 while 56.5% went to basic necessities.

So why the big increase? One of the main drivers could be that the federal and provincial governments have reverted to deficits to finance their expenditures in recent years, especially during the COVID-19 pandemic. Of course these deficits must one day be paid for by taxes. Deficits should therefore be considered as deferred taxation. 

You might be saying, “Well yes taxes went up, but incomes have also risen.” And while you are right about the incomes, in 2021, the average Canadian family earned an income of $99,030 as compared to an average family income of $5,000 in 1961. The 2021 family paid total taxes equaling $42,547 (43.0%) In 1961, they paid a total tax bill of $1,675 (33.5%). Therefore even with the increase in income, the proportions paid to taxes are definitely not the same. 

If you are looking for ways to decrease the amount of taxes owing, you wouldn’t be alone. One of the best ways to reduce your tax burden is to take advantage of deductions and credits offered by the federal and provincial government. With the list of deductions changing yearly, it is best to check with your tax professional on which credits apply to you and that you are eligible for this period. Our goal at Gardhouse Financial is to always help make sure you’re getting all the refunds you’re entitled to. 

As a reminder, the deadline for filing your individual income tax and benefit return is April 30, 2023, however because it falls on a Sunday, your return will be considered filed on time if the CRA receives it or it is postmarked on or before May 1, 2023.