How the Government Spends Your Tax Dollars

As a dutiful Canadian, you likely have to file an income tax return with the Canada Revenue Agency each year. The taxes collected from individual taxpayers through income tax filings as well as other types of taxes collected are spent in a number of different ways.

Just over a quarter of every tax dollar spent goes to support the Canadian people. As of 2014, the government spent $72.2 billion on critical programs that make Canada the envy of her neighbors.

For seniors, tax money funds programs such as:

• Old Age Security
• Guaranteed Income Supplement
• Allowance for Spouses.

However, the government also invests in the future by helping families through programs such as the Canada Child Tax Benefit and the Universal Child Care Benefit. These tax dollars also support Employment Insurance benefits that allow new parents, pregnant women and individuals with short-term disabilities to receive a portion of their income if they temporarily cannot work.

Nearly 22 cents of every tax dollar spent is transferred from the federal government to territorial or provincial governments. This money helps fund:

• health care programs
• special funds for First Nation health services
• veteran health care
• public health issues
• post-secondary research

The federal government also sends extra money to less prosperous provinces and territories through Equalization and Territorial Formula Financing programs. Such programs allow these areas to set up programs and services that they wouldn’t be able to afford otherwise, and it ensures a relatively level playing field in all parts of Canada.

The bulk of the nation’s tax income is used for security and infrastructure, and as 2015, these expenditures accounted for 29 cents of each tax dollar spent. This money covers:

• national defense
• the Royal Canadian Mounted Police
• prisons
• border patrol
• the CRA

It also funds organizations such as Employment and Social Development Canada, Environment Canada, the Department of Justice, Transport Canada and Veterans Affairs Canada. Crown corporations such as the Canadian Commercial Corporation and the Canadian Broadcasting Corporation also fall into this spending category.

A small portion of this money, less than a quarter of a cent of every tax dollar, pays federal politicians.

Canada’s public debt accrues interest charges. To pay them, the government uses approximately 10 cents of every tax dollar or, as of 2015, $28.2 billion per year.

Much of that money goes back to Canada, as 74 percent of the debt is held domestically by citizens and institutions through federal bonds, treasury bills and similar products.

Finally, the government spends 13 cents of every tax dollar on grants, contributions and subsidies.

This includes assistance for learning, skills training and social housing. It also includes funding for programs for First Nation and Aboriginal people as well as transfers from the CRA to qualifying individuals and corporations through credits and deductions that support farmers, researchers, the arts and other worthy causes.