Oh, Canadians:
Wow…. 🤯 Canadians actually believe they will no longer be living paycheck to paycheck now that Trump got squashed in the midterms.
— Marc Nixon (@MarcNixon24) November 4, 2026
Yes, dear:
Canada’s debt strain is greatest in instalment loans, which include unsecured personal loans and point-of-sale financing. The share of those loans that are at least 90 days overdue reached 2.95 per cent, more than triple the 0.95 per cent recorded in late 2015, the Macdonald-Laurier Institute project showed.
Meanwhile, auto-loan arrears stood at 0.87 per cent, up from a pandemic low of 0.39 per cent in 2021. Credit-card arrears reached 0.80 per cent, nearly double from their 2021 low of 0.44 per cent.
Doug Hoyes, co-founder of insolvency firm Hoyes, Michalos & Associates Inc., said borrowers often tap a line of credit to make up for lost income. When that runs out, they turn to credit cards, then higher-cost instalment loans and payday lenders.
“You cannot keep layering borrowing on top of borrowing,” he said.
Hoyes said many of his clients use those loans to cover bills after exhausting cheaper sources of credit, hoping their income will recover before the payments become unmanageable.
His firm’s clients carried average unsecured debts of more than $67,000 last year, up 11 per cent from a year earlier and 37 per cent over three years, and owed money to an average of 10 creditors.
Matt Fabian, TransUnion Canada’s senior director of financial services research and consulting, said that while Canadians are having trouble paying back their loans, they’re still relatively managing their debtload. Payment deferrals, government support and reduced spending during the pandemic helped pushed overall arrears to unusually low levels from the recession of 2008-2009 before bouncing higher in the past year, he noted.
“For some products, in some segments, it’s higher than it was pre-COVID. For some, it’s just returning,” he said.
**
In December 2015, Canada’s new Liberal government introduced changes to Canada’s
personal income tax system. Among the changes for the 2016 tax year, the federal govern-
ment added a new income tax bracket, raising the top tax rate from 29 to 33 percent on
incomes over $200,000. This increase in the federal tax rate is layered on top of numerous
recent provincial increases. Starting with Nova Scotia in 2010, through 2023 at least one
Canadian government has increased the top personal income tax rate in every year except
2011, 2019, and 2023. Over this period, seven out of 10 provincial governments increased
tax rates on upper-income earners. As a result, the combined federal and provincial top
personal income tax rate has increased in every province since 2009.
The largest tax hike has been in Newfoundland and Labrador, where the combined
top rate increased by 10.3 percentage points (or 23.1 percent). This raised the province
from one of the lowest combined top rates in Canada in 2009, up to the highest rate in the
country in 2023. In Ontario, the combined top rate increased by 7.1 percentage points (or
15.3 percent); in Quebec it increased by 5.1 percentage points (or 10.6 percent).
These increases have important consequences for Canada’s economy. In particular,
high and increasing marginal tax rates—that is, the tax rate on the next dollar earned—
discourage people from engaging in productive economic activity, ultimately hindering
economic growth and prosperity. This occurs because marginal tax rates reduce the reward
of earning more income and, in the case of personal income taxes, more labour income.
There is general agreement in the economic literature on this point; the debate is about
the magnitude of the effect.
The federal and provincial increases to Canada’s marginal income tax rates from 2009
to 2023 have put the country at a greater competitive disadvantage for attracting and
retaining skilled labour and, less directly, investment and entrepreneurs. Even before the
changes, the country’s combined federal and provincial top marginal tax rates compared
unfavourably to those in the United States and other industrialized countries.
Out of 61 Canadian and US jurisdictions (including the provinces, states, and Washing-
ton, DC), Newfoundland and Labrador currently has the highest combined top statutory
marginal rate (54.80 percent), followed by Nova Scotia (54.00 percent) and Ontario (53.53
percent). Nine Canadian provinces occupy the list of 10 jurisdictions with the highest top
combined marginal income tax rates and all provinces are in the top 15. There is a total of
46 US jurisdictions with combined top tax rates that are lower than all Canadian provinces.
The fact that Canada’s top tax rates are often applied to lower levels of income than is
the case in other countries further erodes our tax competitiveness. To adjust for differences
in income thresholds, we compare the combined statutory marginal tax rates at various
income levels in Canadian dollars for each Canadian and US jurisdiction. At an income of
CA$300,000, the highest threshold (with the exception of Alberta and Newfoundland and
Labrador) in which a Canadian combined top rate is applied, Canadians in every province
face a higher marginal income tax rate than Americans in any US state. Results are the
same at an income of CA$150,000 and Canada’s marginal tax rates are also uncompetitive
at incomes of CA$75,000 and CA$50,000.
Taken together, Canada’s personal income tax rates are decidedly uncompetitive com-
pared to those in the United States. And, Canada also competes with other industrialized
countries for highly skilled workers and investment.
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