Canada’s middle class is paying more taxes than ever

On the day Prime Minister Justin Trudeau announced his resignation, he began polishing his government’s legacy by claiming his administration had successfully lowered taxes for the middle class.

For Canadians who have been struggling to balance rising living costs with stagnant wages, this claim likely sounded like a stretch. In fact, the numbers say exactly the opposite.

Yes, the Trudeau government can technically say it reduced the second-lowest personal income tax rate from 22% to 20.5%. But he conveniently failed to mention that the government also eliminated the Family Tax Cut, the Children’s Fitness Tax Credit, the Children’s Arts Tax Credit, and income splitting—all credits that helped make raising a family less expensive.

He also conveniently left out that since 2019, the federal government has introduced a new carbon tax, a digital services tax, and a vaping products tax. These taxes were introduced as targeting corporations, but at the end of the day they culminate into the same thing: a tax on consumers. Large corporations don’t absorb the cost of taxes, they pass it along to you and me. Meanwhile, existing consumer taxes have also risen, such as taxes on alcohol and cigarettes. Oh, and mandatory contributions to the Canada Pension Plan have also risen.

It’s now 2024 and your family’s largest expense is likely taxes.

The Fraser Institute crunched the numbers and found that 61% of Canadian families now pay higher personal income taxes than they did in 2015. Among middle-class families, 81% are paying more in taxes today than they were nine years ago.

Taxes now exceed spending on food, clothing, and housing combined for the average Canadian household. Yet, Trudeau’s farewell address deliberately misrepresented the tax burden faced by middle-class Canadians, worsened under his watch.

In a typical year, Canadians work nearly half the year just to fund the taxman, finally celebrating “Tax Freedom Day” in mid-June. That is months of labour—almost half of your waking life—dedicated to funding the government.

Trudeau touting that he “lowered taxes” on his way out just added insult to injury to a decade of rising tax burdens, inflation, and public services that are on the brink of collapse.

You’d think that since we are paying a premium in taxes, we could at least expect a premium in public services: better roads, speedy hospital visits, access to family doctors. Yet, one in five Canadians still does not have a primary care physician. Hospital wait times often exceed 14 hours in some parts of the country, and the number of people waiting longer than medically recommended for surgeries continues to grow.

Dissatisfaction with income taxes is mounting. According to a recent MEI/Ipsos poll, 72% of Canadians feel their income taxes are too high. Among younger Canadians, the supposed future beneficiaries and strong proponents of big government, dissatisfaction climbs to 77%.

What these polls indicate is that it is not just about money. It is about the feeling that whatever the government purports to “give” us, it is coming at too high a cost.

While our standard of living has stagnated over the last decade, we have watched from the sidelines as more than 100,000 new federal bureaucrats were hired—many of whom enjoy better benefits and will have a generous pension waiting for them when they retire. In the meantime, the public is on the hook for a national debt now exceeding $1 trillion, and little to show for it in terms of tangible improvements to hospitals, public safety or other essential services.

We are paying a premium for bureaucracy and political promises that, for many families, never seem to translate into concrete benefits. Moral pontification surrounding taxes loses all legitimacy when you consider that as the tax burden has grown, poverty, homelessness and deaths of despair have all gone up.

It behooves those who want to forcibly take your hard-earned money to continually make the case for it—not the other way around. But in Canada, we have accepted working half the year to pay someone else’s salary and get virtually nothing in return.

Trudeau touting that he “lowered taxes” on his way out just added insult to injury to a decade of rising tax burdens, inflation, and public services that are on the brink of collapse.

As a new government takes office, Canadians must demand a fair deal. At the very least, transparency and accountability. Pierre Poilievre has said he wants to “make work pay,” hopefully he starts by shrinking the government’s take. Unless he makes good on that promise, I guess we should start adding “Canadian Taxpayers” to our LinkedIn profiles.

Samantha Dagres is a communications adviser for the Montreal Economic Institute. The views reflected in this opinion piece are her own.