For the fiscal year ending March 31, 2007, Canada's federal government collected $236.0 billion in taxes and other revenues. That represents a bit over 16 per cent of our country's over $1.4 trillion economy.
Here's a quick overview of where that money went and how it was raised.
About These Numbers
The federal government calculates its finances over a 12-month "fiscal year" that ends every March 31. This presentation is based on the Annual Financial Report of the Government of Canada for the most recent completed fiscal year, 2006–07. Where Your Tax Dollar Goes is updated annually, after the Government's final financial results become available. Please note that numbers may not total 100 per cent due to rounding.
The largest single federal spending item was interest payments on Canada's public debt (that is, money borrowed by the central government over the years, which has not yet been repaid to the lenders). These payments—to institutions and people who hold federal bonds, treasury bills and other forms of the debt—cost $33.9 billion. That's almost 14½ cents of every tax dollar
Cash payments that go directly to individuals, to provincial and territorial governments, and to other organizations are called "transfers." There are three major categories of transfers. Combined, they make up more than half of all federal spending—about 53 cents of each tax dollar ($124.9 billion).
The biggest transfer category was Major Transfers to Persons. These direct payments to people cost about 23½ cents of every tax dollar ($55.6 billion).
Support for Families and Children
The federal government also provides assistance to low- and modest-income families—especially those with children—through the goods and services tax (GST) credit ($3.6 billion). Since these payments are subtracted from ("netted against") GST revenues, they are not included in the spending calculations presented to Parliament in each year's federal budget.
The federal government also funds several Major Transfers to Other Levels of Government. These payments—totalling about $42.5 billion last year—help provinces and territories pay for health care, post-secondary education and other programs for Canadians.
Between 1996 and 2004, much of this support came through a single program, the Canada Health and Social Transfer. However, to improve the transparency and accountability of federal support for health, the federal government created two separate programs starting in 2004.
Further major transfers, including the Equalization and Territorial Formula Financing programs, equal 5½ cents of every tax dollar ($13.1 billion). These are payments from Ottawa to less prosperous provinces, and to the three territories, to help them provide public services that are reasonably comparable to those that more prosperous provinces can deliver.
There were also a variety of other federal transfers, such as $0.6 billion in gas tax transfers to cities and communities for purposes of environmentally sustainable municipal infrastructure, $0.7 billion for early learning and child care, and $2.7 billion in targeted support to provinces and territories for health care, post-secondary education, labour market training and the environment. Together, these helped boost transfer funding by almost 2 cents of each tax dollar ($4.0 billion).
As a result of long-standing fiscal arrangements with the provinces, these total transfers exceed $42 billion.
Alternative Payments for Standing Programs and the Quebec Abatement
Support for Health Care
Federal support for health care goes beyond cash payments under the Canada Health Transfer and the Equalization program.
For example, in 1977 the federal and provincial governments agreed to have provinces take over a share of federal taxes to supplement direct cash transfers. In 2006–07, these "tax points" added some $20.5 billion to provincial finances for programs such as health care as well as post-secondary education and social assistance and social services.
There is also direct health-related spending by the federal government itself, which contributed over $6 billion last year. This included funding for First Nations health services; health care for veterans; and programs for health protection, disease prevention, health information and health-related research.
Other transfer programs by various federal departments provide funds to individuals, governments and other organizations and groups for specific public policy purposes.
Last year, spending on these federal grants, contributions and subsidies added up to $26.8 billion, or over 11 cents of each tax dollar. This included:
Other funding went to student assistance programs, health research and promotion, the arts, amateur sports, and multiculturalism and bilingualism.
After transfers, the bulk of federal tax dollars went to cover the operating costs of government itself: the more than 130 departments, agencies, Crown corporations and other federal bodies that provide programs and services for Canadians.
Last year, these operating costs (such as salaries and benefits, facilities and equipment, and supplies and travel) made up almost 27 cents of each tax dollar ($63.3 billion).
A large share of this spending—close to 13 cents of each tax dollar—went to just three organizations.
First, spending last year by the Department of National Defence on Canada's military forces made up almost 7 cents of each taxpayer dollar ($15.7 billion).
Next, operating costs of Public Safety Canada were just over 3 cents of your tax dollar ($7.4 billion). This includes funding for the Royal Canadian Mounted Police, the federal prison system, and border traffic and security operations.
And third, there was funding for the Canada Revenue Agency, which administers the federal tax system (and also collects personal income taxes for all provinces except Quebec). Its operations cost close to 3 cents of each tax dollar ($6.8 billion).
A further $26.3 billion—just over 11 cents of each tax dollar—was spent on the operations of the other federal departments and agencies.
These included major departments such as: Environment; Fisheries and Oceans; Health; Human Resources and Social Development; Industry; Justice; Natural Resources; Public Works; Transport; and Veterans Affairs.
As well, funding went to federal agencies such as the Canadian Food Inspection Agency, Parks Canada and the Canadian International Development Agency.
Paying for Parliament
One of the smallest slices of federal operating spending 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 $510 million. That's less than one-quarter of a cent of every tax dollar.
The last portion of Other Program Expenses were those incurred by Crown corporations (organizations owned directly or indirectly by the Government). This cost $7.2 billion, or a bit over 3 cents of your tax dollar. But the bulk of this spending was by just three organizations:
Funding was also provided to cultural organizations (including the National Gallery of Canada, the Canadian Museum of Civilization and the Canada Council for the Arts), to enterprises like VIA Rail, and to the Canadian Tourism Commission.
The remaining 6 cents of the tax dollar was the $13.8-billion budgetary surplus—how much money was left after paying for all federal programs, operations and interest on the debt.
This surplus was not money available for future spending. Government accounting principles mean that any surplus at year-end automatically reduces the federal debt.
That's our brief summary of the investments and operations where Canadians' federal tax dollars go. But before finishing, let's look at how these funds are raised.
The federal government's budgetary revenues came from a variety of taxes and other sources.
So that's the story of where your federal tax dollar goes, and how it was raised.
More information on Government of Canada finances is available from these sources:
A multimedia version of this document—which also includes direct links to other online material on federal finances—is available on the Internet at www.fin.gc.ca.
General information on the Government of Canada and its operations is available by phoning:
1 800 O-Canada (1 800 622-6232)
1 800 926-9105
(TTY for the speech and hearing impaired)