Seth Klein did his income-tax form several days before the April 30 deadline for filing returns. He had to pay 14.5-percent tax on his earnings, minus deductions for child-care and retirement savings. That's on top of the taxes withheld from his salary as well as duties he paid for sales, services, and property. But Klein, the B.C. director of the Canadian Centre for Policy Alternatives, doesn't mind.
"I look at that and I think, 'What a deal!'" Klein told the Georgia Straight . "You know, like everything I'm getting from the federal and provincial governments for 14-and-a-half percent."
Klein said that even if he were to combine all the taxes he pays, these won't amount to anything close to the 44.9-percent average tax bill cited by the Fraser Institute in an April 2007 paper. Entitled "The Canadian Consumer Tax Index, 2007", the document stated that since 1961, "taxes have grown much more rapidly than any other single expenditure for the average Canadian family". It defines an average Canadian family as one that earned $63,001 last year.
"In 1961, the average family had to use 56.5 percent of its income on basic necessities (food, shelter and clothing), while only 33.5 percent of the family's income went to taxes," the paper noted. "In 2006, the proportion of income consumed by taxes had increased (44.9 percent), while the fraction of income spent on shelter, food, and clothing (35.6 percent) had dropped dramatically."
The Fraser Institute is known to advocate tax cuts, but the paper's coauthor, Niels Veldhuis, notes that the document doesn't make an argument about how large or small a tax bill should be.
"That's something each Canadian has to figure out on their own," Veldhuis, director of the free-market think tank's Centre for Tax Studies, told the Straight . "We all have a different level of service. We offer them a tool to make that calculation."
According to the document, the total tax bill is the sum of all of the various taxes on income, sales, Employment Insurance, and Canada Pension Plan, as well as "hidden taxes" such as excise taxes on tobacco and alcohol, amusement taxes, and gas taxes. It also includes those levied on businesses because the "cost of business taxation is ultimately passed on to ordinary Canadians".
"If you think you're getting value for money, then obviously you'll be happy," Veldhuis said. "If you don't think you're getting value for money, then obviously you're gonna want to vote or do something or advocate for people who want to change the existing tax bill."
Klein, however, said that the Fraser Institute came up with a high figure because it combined all taxes and various forms of government revenue and ascribed it to the individual taxpayer.
Klein's real bone of contention with the Fraser Institute is that it makes it appear as if taxes don't do anything.
"They like to present it as if taxes go into some black hole and that they don't actually pay for things that we value," he said. "We didn't have Medicare in 1961. We didn't have Canada Pension Plan in 1961. We had a postsecondary [school] system that enrolled a fraction of the share of people that it does today. Yeah, we're paying more in taxes, but we're getting a lot more from it."
Although it may appear that Canadians are paying a lot of taxes, a December 2006 paper released by the Canadian Centre for Policy Alternatives showed the country is actually clustered among a number of low-tax Anglo-American nations, including the United States, that it compared with high-tax Nordic countries.
The study, entitled The Social Benefits and Economic Costs of Taxation , indicated that Canada's average annual tax revenue was 35.7 percent of its gross domestic product, or the total market value of goods and services produced, from 1990 to 2002. Nordic countries–Norway, Finland, Denmark, and Sweden–have percentages ranging from 41.9 percent to 50.5 percent.
The paper noted that Nordic countries are better off than Anglo-American nations in a wide range of social indicators, such as low poverty rates, gender equality, a more equitable income distribution, protection of vulnerable people (particularly the elderly), less crime, and a better environmental performance.
The study stated that the results of its review indicate that American jurist Oliver Wendell Holmes was probably right when he said, "Taxes are what we pay for civilized society."