Kim Moody: Some of these charges are obvious, but many are buried in the fine print of daily life, quietly draining wallets
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People automatically assume you mean income tax when you talk to them about paying taxes, but have you ever thought about all the other types of taxes and government fees and levies that erode your income and wealth?
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Technically, taxes are mandatory, with no direct benefit to such payments. Fees charged by governments are usually in exchange for some type of service or other benefit. A levy is often imposed on an industry or activity, but can encompass a broad category of costs. In real life, the distinction between fees and levies can be very blurry.
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Here’s a quick list of some of the more obvious tax and fees and levies that Canadian families will pay in a year:
1. Federal and provincial income taxes: The rates vary by taxable income and province of residence for individuals, but range from a low of zero to a high of roughly 54 per cent. These taxes include taxes on employment, capital gains, property income, business income, etc.
2. Canada Pension Plan, Québec Pension Plan and Employment Insurance: These are a form of a payroll tax since contributions by the taxpayer are mandatory.
3. GST/HST: There are some exceptions to Canada’s value-added consumption tax, but it can range from a low of five per cent (in Alberta, Nunavut, Yukon and the Northwest Territories) to a high of 15 per cent in most Atlantic provinces.
4. Provincial sales tax (PST): British Columbia, Manitoba, Quebec and Saskatchewan also charge a separate provincial sales tax since they are not harmonized with the GST. This adds obvious confusion in those provinces as to what is taxable for PST purposes versus GST purposes.
5. Federal and provincial excise taxes on gasoline and other fuels with additional carbon taxes.
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6. Federal and provincial excise taxes on alcohol.
7. Federal customs duties and tariffs on certain imported goods.
8. Federal luxury taxes on certain automobiles, airplanes and boats.
9. Air travellers security charge: This is levied on a per-passenger basis depending on the type of flight.
10. Provincial vehicle registration and driver’s licence fees: All provinces charge a fee to register vehicles and have a driver’s licence.
11. Municipal property taxes: Each municipality in Canada charges you a lovely tax for the pleasure of owning real estate in its jurisdiction.
12. Property transfer tax: Some provinces, such as B.C. and Ontario, charge land transfer taxes each time a property’s title is transferred.
13. Life insurance premium tax: If you own a life insurance policy in Canada, well, you’re indirectly paying a provincial premium tax that the life insurance carriers pay.
14. Development charges: Often paid by land developers to municipalities to fund various infrastructure (schools, roads, etc.) that are passed on to the purchasers of the property.
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15. Municipal landfill fees: If you want to dump your garbage off, there’s often a cost for that.
16. Municipal parking fees and fines: If you want to park in a city, there’s a cost for that.
17. Toll roads and bridges: some provinces, such as Ontario, charge fees to access certain roads and bridges.
18. Short-term rental fees: Some municipalities charge registration fees for the pleasure of renting out your property. Such costs are passed along to renters.
19. Business licensing fees: Many municipalities charge a fee for starting or operating a business.
20. Building permit fees: There is usually a municipal permit requirement with a fee for building or renovating your house.
21. Emergency services fees: There’s a price to be paid if you need an ambulance.
22. Vacancy taxes: Some municipalities, such as Toronto and Vancouver, have vacancy taxes that can apply to residents if their property is sitting vacant too long.
23. Passport fees: There’s a fee to obtain a passport.
24. Firearm fees: There’s a fee to obtain a gun.
25. Ontario health premium: The province charges a maximum of $900 per year, depending on your taxable income. Alberta and B.C. previously had health premiums, but abolished them.
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I could go on and on. Hopefully, you see the picture that taxes, fees and levies carry a huge cost for families.
The Fraser Institute’s eye-popping annual survey of the tax load for an average Canadian family of four (married couple with two young children) said the taxation load in 2023 was 43 per cent of the family’s cash income. This percentage does not include some of the fees and levies listed above, and it’s also significantly higher than the costs for food, clothing and shelter combined.
It’s pretty clear our governments find ways to tax, fee and levy Canadians and have an insatiable appetite to do more of it. Some of these charges are obvious, but many are buried in the fine print of daily life, quietly draining wallets.
That the average family’s tax burden exceeds their combined basic living costs should be a wake-up call to take a hard look at what you’re paying and ask whether you’re getting good value in return.
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The answer is an emphatic no. We should be expecting more for our hard-earned contributions and that starts with demanding balanced budgets (not playing accounting games to get to balanced budgets or reduced deficits such as Mark Carney is proposing to do) and respect for taxpayer dollars from our politicians.
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“The best way to teach your kids about taxes is by eating 30 per cent of their ice cream,” the famous actor Bill Murray once said. Except in Canada, the ice cream-eating percentage is far more than 43 per cent. I’m confident your kids won’t feel like they got good value in return for you eating that 43 per cent.
Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.
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