Your guide to the Canadian Federal Budget

Toronto – April 3, 2017 – What happens to the money that the federal government uses to keep Canada strong and healthy? Many of us appreciate the services that the federal government provides to citizens, such as health care, education, national defence, and environmental protection. Yet, when it comes to understanding what happens to our taxes, many of us think that only people with economics degrees can understand budgets. That's not true! This interactive page will help you feel confident in understanding what happens with your tax money.

Click on the item below to learn what your tax dollars are doing:

Revenue/ Income

Every home, business and community requires money to make their lives more meaningful and productive. The way we function as a country is to gather money (taxes) from those who benefit from living here.

  49% ($143.2 Billion) - Personal Income Tax:

Approximately half of the government's income comes from workers across Canada.

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14.6% ($42.5 Billion) - Corporate Income Tax:

Only 14% of government revenue comes from corporate taxes. This amount has been regularly reduced and today’s rate is down 36% from the 1980s. The notion of corporate tax cuts was to spur economic growth but studies have shown that those cuts have done nothing to help economical growth.

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  9.2% ($26.7 Billion) - Investments and other revenues

This figure represents income from investments and revenues from the 43 Crown corporations such as Canada Post, the CBC, Via Rail, the Royal Canadian Mint and much more.  In 2015, the top five corporations contributed approximately $60 billion dollars.

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  11.5% ($33.7 Billion) - Federal government Goods and Services Tax (GST)

The current GST rate is 5% and generates approximately $35 billion each year.

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  7.6% ($22.3 Billion) - Employment Insurance (EI) Premiums

Employment Insurance premiums are paid by workers and employers to the government to ensure that when workers cannot find employment readily, there are funds to ensure families and communities don't suffer as a result.

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  8.1% ($23.6 Billion) - Other taxes, duties and non-resident income tax

Aside from taxes that are collected from businesses and individuals, this figure includes revenue generated by duties on tobacco, alcohol, petroleum products, annuity and registered retirement income fund (RRIF) payments, and much more. 

Canadians have the ability to hold the government accountable for the money we pay into the revenue system. We do it by voting, lobbying, speaking to our elected members of Parliament, and through peaceful demonstrations. Our taxes go towards providing education for our children, healthcare for our families, upholding the judicial system, and economic policies to ensure healthy and sustainable communities to raise our families.

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Expenditures/ Spending

What the government chooses to spend tax money on is another way of showing what their priorities are.

  26.1% ($83.2 Billion) - Ministries

Ministries are responsible for handling issues the country faces now and in the future. Some ministries include Public Safety and Emergency Preparedness, Fisheries, Oceans and the Canadian Coast Guard, National Defence, Status of Women, Youth, Science, and Employment, Workplace and Labour.

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  21.5% ($68.7 Billion) - Major transfer payments

The Government of Canada provides significant financial support to provincial and territorial governments on an ongoing basis to assist in providing health care, post-secondary education, social assistance and social service, as well as early childhood development and childcare.

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  15.1% ($48.3 Billion) - Elderly Benefits

This figure represents benefits received by seniors such as Old Age Security (OAS), and Guaranteed Income Supplement to name a few.

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  14.9% ($47.7 Billion) - Other transfers to governments

An example of other transfers would be trust funds, which offer flexibility to provinces and territories to draw down any fund, either immediately, or over an allocated period. The following are examples of trust funds:

Community Development Trust: $1 Billion over three years

Public Transit Capital Trust: $500 million over two years

Police Officers Recruitment Fund: $400 million over five years

Canada ecoTrust for Clean Air and Climate Change: $1.519 billion over three years

Patient Wait Times Guarantee Trust: $612 million over three years

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  8.9% ($28.5 Billion) - Public Debt Charges

Money set aside to repay debts incurred by the government.

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  6.6% ($21 Billion) - Employment Insurance Benefits

The Canadian government provides support to workers during life-changing events such as sickness, birth and job loss. Such benefits include maternity and parental leaves, compassionate care, sickness benefits and financial support when no longer employed.

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  6.9% ($21.9 Billion) - Children's Benefits

Funds that are paid to parents and guardians to ensure that each Canadian child grows up with their basic needs met.

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Sources: "Throwing money at the problem," Canadian Centre for Policy Alternatives, 2017. "Wealth gap widens in Canada as richest see faster rise in net worth,"Global News, 2015. "Corporate tax cuts may be 'one of the great policy blunders of the past generation': Study,"Huffington Post, 2015. "Canada lost when Ottawa cut the GST,"The Globe and Mail, 2013. "Line 130 - Other kinds of income," Canada Revenue Agency. "Other duties and taxes," AlbertaCanada.com, 2015. "Robbing the poor to give to the rich," Canadian Dimension, 2015. "Federal Support to Provinces and Territories," Department of Finance Canada, 2016. "Federal Trust Funds,"Department of Finance Canada, 2012. "Annual Report 2015,"Canada Post, 2016. 

Coming this spring to webCampus – Understanding Budgets: What’s at Stake. An easy to understand course that helps members and their families to understand how budgets can change Canada everyday.