Personal Income Tax
People just hate paying taxes. I think a lot of that has to do with we really don’t know where it goes. It all goes into that sinkhole we know as General Revenue. From there what happens to it is a mystery. Of course, there are many things the government spends money that really tick off people, and that has much to do with this hatred for taxes. So where does this money we grudgingly pay to the government go exactly?
The following figures are from the Department of Finance for the fiscal period 2013 to 2014, and we accept no responsibility for their accuracy, nor for how much they may tick you off.
For the fiscal year ending March 31, 2014, Canada’s federal government spent $276.8 billion. That represents roughly 15 per cent of our country’s $1.9-trillion economy.
Payments that go directly to persons, to provincial and territorial governments, and to other organizations are called “transfers.” Transfers are the largest category of government spending. They made up about 61 cents of each tax dollar spent ($169.4 billion).
Transfers to persons
Major transfers to persons cost 26 cents of each tax dollar spent ($72.2 billion). The biggest category within transfers to persons was elderly benefits. These transfers include:
- Old Age Security
- Guaranteed Income Supplement
- Allowance for Spouses
Total elderly benefits cost about $41.8 billion, or roughly 15 cents of each tax dollar spent.
Another major transfer to persons is Employment Insurance (EI) benefits. Altogether, EI benefits cost over 6 cents of every tax dollar spent ($17.3 billion). The final category of transfers to persons is children’s benefits. The federal government provided $13.1 billion to help families raise their children through the Canada Child Tax Benefit and the Universal Child Care Benefit. These payments cost almost 5 cents of every tax dollar spent.
Federal support for health care
Federal support for health care goes beyond cash payments under the Canada Health Transfer and the Equalization and Territorial Formula Financing programs. The federal government also provided over $6 billion last year for:
- First Nations health services
- Health care for veterans
- Programs for public health
- Health research
Other transfer payments
Last year, spending on federal grants, contributions and subsidies added up to $36.7 billion, just over 13 cents of each tax dollar spent. This included:
- $6.3 billion in assistance provided by Employment and Social Development Canada in support of learning, skills and employment, and social housing
- $6.2 billion in transfers by Indian Affairs and Northern Development for First Nations and Aboriginal peoples
- $3.4 billion in transfers by the Canada Revenue Agency, which includes transfers made to individuals and corporations through the tax system
Other funding was provided in support of farmers and other food producers, research and development, infrastructure, regional development, health research and promotion, the arts, amateur sports, international assistance, and multiculturalism and bilingualism.
Other program expenses
After transfers, the bulk of federal tax dollars went to cover the operating costs of the more than 130 government departments, agencies, Crown corporations and other federal bodies that provide programs and services for Canadians.
Government operating expenses such as salaries and benefits, facilities and equipment, and supplies and travel made up 29 cents of each tax dollar spent ($79.2 billion). Close to half of this spending—14 cents of each tax dollar—went to just three organizations.
First, spending last year by National Defence, including the Canadian Armed Forces, made up 8 cents of each tax dollar spent ($21.5 billion)
Next, operating costs of Public Safety and Emergency Preparedness represented over 3 cents of each tax dollar spent ($9.8 billion). This includes funding for the Royal Canadian Mounted Police, the federal prison system, and border traffic and security operations.
Canada Revenue Agency
And third, expenses of the Canada Revenue Agency, which administers the federal tax system (and also collects taxes for all provinces except Quebec) totalled $7.8 billion, or 3 cents of each tax dollar spent.
A further $32.6 billion—12 cents of each tax dollar—was spent on the operations of the other federal departments and agencies. These included major departments such as:
- Employment and Social Development Canada
- Environment Canada
- Fisheries and Oceans Canada
- Health Canada
- Industry Canada
- Department of Justice
- Natural Resources Canada
- Public Works and Government Services Canada
- Transport Canada
- Veterans Affairs Canada
- Funding also went to federal agencies such as the Canadian Food Inspection Agency and Parks Canada.
Paying for Parliament
One of the smallest spending slices goes to Parliament itself—the House of Commons, the Senate and the Library of Parliament. Last year, the combination of salaries and benefits for Members of Parliament, Senators and parliamentary staff, and spending on facilities and services, totalled about $534 million. That’s less than one-quarter of a cent of every tax dollar spent.
Crown corporations (organizations owned directly or indirectly by the Government) cost $7.5 billion, or 3 cents of each tax dollar spent. Most of these expenses were recorded by three organizations:
- Canadian Commercial Corporation—$1.7 billion
- Canadian Broadcasting Corporation—$1.7 billion
- Atomic Energy of Canada Limited—$1.3 billion.
Funding was also provided to cultural organizations (including the National Gallery of Canada, the Canadian Museum of History and the Canada Council for the Arts), to enterprises like VIA Rail, and to the Canadian Tourism Commission.
These costs were partially offset by revenues earned by the Crown corporations, which totaled $3.5 billion in 2013–14. These revenues are included as part of the Government’s other revenues discussed in the section entitled “Where the money comes from.”
Public debt charges
Interest charges on Canada’s public debt—money borrowed by the federal government over the years and not yet repaid and liabilities for pensions and other future benefits—cost $28.2 billion. That’s 10 cents of every tax dollar spent. Currently, 74 per cent of the Government’s un-matured debt is owed to Canadians, including citizens and domestic institutions holding federal bonds, treasury bills and other forms of the debt.
Here’s a summary of where all your tax dollars go:
- Canada Health Transfer (11 cents)
- Canada Revenue Agency (3 cents)
- Canada Social Transfer (5 cents)
- Children’s benefits (5 cents)
- Crown corporations (3 cents)
- National Defence (8 cents)
- Employment Insurance benefits (6 cents)
- Other major transfers to other levels of government (6 cents)
- Other operations (12 cents)
- Other transfer payments (13 cents)
- Public debt charges (10 cents)
- Public Safety (3 cents)
- Support to elderly (15 cents)