Lesson 15 — Activity 2: What Are Taxes Used For?

By now, you may be wondering what all this tax money is used for. A huge amount of tax money is collected each year by different levels of government, but a huge amount is also spent.

In this activity, you will learn what tax money is spent on.

     

The major reasons taxes are collected are: 

• to pay for things that we could not easily or efficiently pay for individually or in small groups

• to ensure that all Canadians have access to certain important services

Every country, province, and community needs things in order to operate properly. These include things like roads, water systems, electricity, recreation facilities, hospitals, and schools. Such things are known as infrastructure.

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Why do we need taxes to build infrastructure? 

Take roads as an example. Roads are built and maintained using tax money. If we didn't do it this way, who would build and maintain the roads in our country? Any company building a road would need to make money, therefore they would have to charge people to drive on the road. Companies wouldn't build roads to places with little traffic because they would not make enough money on these routes. We have a few very expensive roads in Canada that do cost money to travel on, such as the Coquihalla Highway in British Columbia, but we can travel most roads without paying a fee. 

     

Generally, it is cheaper for us to build and maintain roads using tax money than to pay private companies who want to make as much profit as possible to build and operate roads.

Digging Deeper!

Often, municipal governments feel that the federal government needs to give them more money to fix infrastructure. The federal government may say there is not enough money to do so. One of the ways for the federal government to generate more money is to raise taxes.