Many Canadian consumers struggle with heavy debt loads
TORONTO, ON, Jun 7, 2016 – Today is Tax Freedom Day. This signifies every pay cheque Canadian families received up until today went to the government in taxes. However Canadian households have a reason to celebrate as now every dollar they earn will belong to them.
The Fraser Institute says Tax Freedom Day calculates the annual tax burden placed on Canadian families by the three levels of government (municipal, provincial and federal). If a consumer had to pay their taxes all at once, every source of income they received up until now would have been for the government only.
“Governments in Canada, from Parliament Hill to city hall, levy such a wide range of taxes, so it’s nearly impossible for Canadian families to easily calculate their total annual tax bill, which is why our Tax Freedom Day calculations are so important,” says Charles Lammam, director of fiscal studies, the Fraser Institute in a statement.
According to the Fraser Institute, the average Canadian family with two or more people this year alone will pay $45,167 in taxes. This equates to 42.9 per cent from a yearly income of $105,236. So up until now, Canadians have been paying for their various taxation obligations including income taxes, property taxes, fuel taxes, payroll taxes, health taxes and so on.
“In theory, Canadian consumers are free of their taxation obligations today and they can re-adjust their budget and decide how to manage their debt load,” says Jeffrey Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“However many Canadians are living pay cheque to pay cheque and they are feeling heavy burdens. It would be nice if Tax Freedom Day occurred earlier in the year to ease the strain many households are under,” says Schwartz.
The Fraser Institute says Tax Freedom Day varies from province to province depending on the specific taxes of that province. Regionally Tax Freedom Day is as follows:
- Alberta May 17
- Saskatchewan June 1
- Prince Edward Island June 1
- British Columbia June 5
- Ontario June 5
- Manitoba June 7
- Nova Scotia June 9
- New Brunswick June 11
- Quebec June 13
- Newfoundland & Labrador June 14
For Canadian households feeling a tight pinch, Consolidated Credit offers the following tips to ease the strain on household finances:
- Pay yourself first. Create a goal to save 10 per cent of your pay cheque on a monthly basis. Every little bit of savings helps. If you are unable to put away 10 per cent, start small, even half of that. You can increase the amount as it becomes part of your lifestyle.
- Manage your household cash flow. It’s time to get real with yourself and review your whole financial picture from impromptu coffee runs to how much you spend on toys for your kids. Be honest with your expenses and create a budget.
- Recognize when you are in a deep dark hole of debt. If you fear a cheque you wrote is about to bounce and you do not know how you are going to pay the minimum payment of your credit card bill, it is time to get help. Speak to a trained credit counsellor and they will help you to manage your debt.