Sunday Spectacle L

Canadian Federal Government
Income & Expense Breakdown

The illustration is for Canada but most developed countries are similar. Note that this is just the federal government (the breakdown is different for provinces/states and municipalities.)

One thing that may surprise some is how businesses don't contribute all that much to the federal government. Personal income taxes contribute around 40% to 50%, with sales taxes (GST and duties) contributing another 20%, while corporate taxes amount to less than 20% of federal government income. Corporate income taxes have fallen due to the recession but even during good times, corporate taxes don't contribute that much.

However, note that corporate income is taxed twice. The corporation pays an income tax and the owner would pay an income tax on the dividends or capital gains from that corporation (assuming that person resided in Canada.)

The success of the Liberals in cutting debt charges is also evident the picture (most of the changes were in the late 90's but the results show up later.) Debt charges were around 25% of government income in the early 2000s but is less than 10% right now.

Debt charges was the main financial problem in the late 90's but going forward, given the ageing population, the issue will be the contributions to the elderly.

(source: "A 10-year timeline of revenues and spending," The Globe & Mail, undated (1st week of March of 2010))


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