The Canadian federal, provincial and territorial governments each have their unique way of answering these questions. This is why Canadians need to know about these budgets to make informed decisions on how Canada taxes its citizens.

Canada has 19 different jurisdictions, and their total expenditures amount to over $471 billion annually. These 19 jurisdictions are made up of the ten Canadian provinces and the nine territorial governments. They include their respective provincial or territorial capital cities and territories. The Canadian federal government is not considered a jurisdiction.

Canadian Federal Budget

The federal government’s role is to provide essential public services and keep its citizens secure. To do this, it collects revenue through taxes, duties, and fees. It provides Canadians with essential services such as highways, parks, schools, and hospitals.

The country has two types of taxes: direct and indirect. Direct taxes include income, payroll, and capital gains taxes. On the other hand, indirect taxes include goods and services tax (GST), an excise tax on alcohol, tobacco, and gasoline, sales tax on certain items, including vehicles, import duties, and tariffs on foreign products.

Taxation accounts for almost 40% of the federal government’s total annual expenditures. As such, it is crucial for Canadians to know about this budget.

Canadian Provincial Budget

While the federal government deals with national issues, the provincial governments take care of local ones. They collect taxes to support and develop primary health care, education, and transportation services.

All provinces and territories get their income from government-owned corporations, levies on specific goods and services, fees for licenses, permits, and registries, property tax, inheritance tax (in Québec), and, most importantly, personal income taxes.

Taxes in Canada are generally progressive, which means wealthier individuals pay a larger share of their income than poorer ones.

Taxation accounts for about half of each provincial government’s total expenditures.

Canadian Territorial Budget

Territorial governments are the third and most minuscule level of government in Canada. The territories are commonly called the Northern Territories because they are closer to the North Pole than any other part of Canada. They collect taxes to sustain essential services such as education, health care, and transportation. Their three primary sources of income include resource royalties, property tax, and taxation.

The revenues of the territorial governments are not as significant as those of the provincial governments because they do not own corporations that collect large incomes.

See Budgeting by government jurisdiction for more information on federal, provincial, and territorial budgets.

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