TAX FREEDOM DAY 2011

TAX FREEDOM DAY 2011 and THE CANADIAN DEBIT

June 6 marks tax freedom day, the day Canadians start making money for themselves rather than the taxman

Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden (Wikipedia)

You finally made it.

Monday is tax freedom day — unfortunately two days later than last year — marking the day Canadians start making money for themselves rather than hungry taxman.
That’s right, up until now, hard working Canadians have been slaving away, only to hand their paycheques over to municipal, provincial and federal tax collectors.

According to the Institute, in 2011 the average Canadian family will earn $93,831 in income and will pay a total of $39,960 in taxes, or 42.6 per cent.

Tax freedom day also just happens to fall on the day federal Finance Minister Jim Flaherty will deliver his budget.

The Fraser Institute explained that tax freedom day was later this year primarily due to Canada’s improving economy.
“When the economy recovers and incomes increase, a family’s tax burden tends to increase to a greater extent. That is partly due to our progressive tax system and because of consumption increases, which result in an increase in the amount of sales and other consumption taxes Canadian families pay,” it stated.

Apart from income taxes and taxes on investment income, we pay 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.

“Had Canadian governments increased taxes to balance their budgets, the average Canadian family would have worked until June 21 to pay the tax bill,” the Institute stated. “In other words, the balanced budget tax freedom day arrives on June 22, 16 days later than tax freedom day.”

CANADIAN DEBIT

This year, it is estimated the Canadian federal government will be running a $30 billion deficit. That's a deficit; I'm not talking about the debt which is estimated at $566.7 billion. This year, our government is going to spend $30 billion more than it earns. Just imagine that each year you spent more than you earned. How long do you think you could do that before you went bankrupt? Now running a government is a little different from you or me as we don't have the power to raise money through taxes, but I'd say there are similarities and sooner or later something is going to happen or something is going to have to happen. Invariably we could see Tax Freedom Day pushed later into the year. July 1? August 1? How long will we all have to work until the magic day where our money is going into our pockets instead of the coffers of our governments?

Here's a little note about the debt. Right now, Canada's national debt is $566.7 billion; that is $16,600 for every man, woman, and child. That means the government has had to borrow that money to pay for its business. That means at some point, that debt must be paid off. Picture Canada walking into the bank to borrow $566.7 billion. At a modest 5%, each year that would generate $28,335,000,000. Yes, that's $28 billion in interest. That means the government must pay the $28 billion then some to eventually pay off its debt. But, this year the government has a $30 billion deficit. That means it has to spend $28 billion just to cover the interest on its debt but it's borrowing $30 billion. That would seem to mean that our government doesn't earn enough to pay the interest on its loan and cover its other obligations. My goodness, I don't run my own finances like that. Just how long can the Canadian government keep this up?

This is the catastrophe waiting to befall our southern neighbour. The U.S. has a debt of $14 trillion which works out to approximately $42,000 for every man, woman, and child. Just what mess are they going to eventually find themselves in if they're aren't already there? We need to pay attention. I don't want Tax Freedom Day to end up in September.