MONTREAL, QUEBEC--(Marketwire - June 4, 2010) - Quebecers will celebrate Tax Freedom Day on June 7, three days later than in 2009 and the third latest in Canada, ahead of only Saskatchewan and Newfoundland & Labrador, according to the Fraser Institute's annual Tax Freedom Day calculations.
Tax Freedom Day is the day in the year the average Quebec family has earned enough money to pay the taxes imposed on them by all levels of government. If Quebecers were required to pay all of their taxes up front, they would have to pay each and every dollar they earned to governments prior to Tax Freedom Day. The complete report is available at www.fraserinstitute.org.
"Quebecers face one of the highest tax burdens in Canada. Next door in Ontario, taxpayers celebrate Tax Freedom Day on May 31, seven full days earlier than in Quebec," said Filip Palda, Fraser Institute senior fellow and professor at the École nationale d'administration publique.
When calculations of tax rates are averaged across Canada, Tax Freedom Day falls nationally on June 5.
Among all provinces, Alberta continues to enjoy the earliest Tax Freedom Day on May 19, followed by New Brunswick and Prince Edward Island on May 26, then Manitoba on May 30. Next comes Ontario (May 31), Nova Scotia (June 4), British Columbia (June 5), and Quebec on June 7. Newfoundland and Labrador, along with Saskatchewan have the latest Tax Freedom Days at June 12 and June 16.
Both Newfoundland and Labrador, and Saskatchewan have significant natural resources which provide the provinces with royalties. However, there is an ongoing debate whether natural resource royalties are actually a tax. If natural resources royalties are excluded from the Tax Freedom Day calculations, then Quebec shares the latest Tax Freedom Day with Saskatchewan among all Canadian provinces, on June 7.
Reasons for a Later Tax Freedom Day
Quebec's June 7th Tax Freedom Day comes three days later than 2009, when it fell on June 4.
"The later arrival of Tax Freedom Day in 2010 is due to the improving economy as Canada emerged from the recession of 2009 and tax increases implemented in the 2010 Quebec budget," Palda said.
When the economy recovers and incomes increase, a family's tax burden tends to increase to a greater extent. For example, consumption increases which results in an increase in the amount of sales and other consumption taxes paid by Quebec families.
Additionally, the Quebec government increased several taxes in its 2010 budget (i.e. gas tax, mining duties, and financial institutions tax) and introduced a new health tax of $50 per couple in 2010 that is scheduled to increase to $400 per couple by 2012. The province also plans to increase the Quebec sales tax to 8.5 per cent from 7.5 per cent in 2011 and to 9.5 per cent in 2012.
"These future provincial tax increases that were detailed in the 2010 Quebec budget will likely result in a later Tax Freedom Day for Quebecers in coming years," Palda said.
Budget Deficits
The report also points out that the recession and the Quebec and Federal government's attempts to stimulate the economy through deficit spending would have a dramatic effect on Tax Freedom Day if government deficits were included in the calculation.
"Deficits are really just taxes that are deferred to a future date. If the Quebec and federal government had increased taxes to balance budgets rather than running deficits, Tax Freedom Day would fall 18 days later on June 25," Palda said.
Total Tax Bill
In 2010, the average Quebec family (with two or more individuals) will earn $77,738 and pay a total of $33,300 in taxes, for a total tax bill amounting to 42.8 per cent of its income.
The total tax bill for the average Quebec family will increases by 1.9 per cent ($629) in 2010. The largest increase among the myriad of taxes came from sales taxes, up $263 for the average Quebec family. Income tax increased by $261 with profit taxes rising $185.
The taxes used to compute Tax Freedom Day include income taxes, property taxes, sales taxes, profit taxes, health, social security and employment taxes, import duties, license fees, taxes on the consumption of alcohol and tobacco, natural resource fees, fuel taxes, hospital taxes and a host of other levies. As is the case every year, Tax Freedom Day calculations are based on forecasts of personal income and federal and provincial budget tax revenue. When final revenue numbers become available at the end of each fiscal year and personal income data are updated by Statistics Canada, we revise our Tax Freedom Day calculations for previous years.
Quebecers can calculate their personal Tax Freedom Day using the Fraser Institute's Personal Tax Freedom Day Calculator at www.fraserinstitute.org.
The Fraser Institute is an independent public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and a global network of 75 think tank partners. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.