The Origins of Canadian Income Tax: A Temporary Measure That Never Ended

When the Canadian government introduced income tax in 1917, it was marketed as a temporary measure to help finance the country’s involvement in World War I. Over a century later, not only has income tax persisted, but it has steadily expanded, increased, and evolved into a financial burden for millions of Canadians. This raises the question: How did a “temporary” wartime tax become a permanent fixture of Canadian life, and why does it continue to grow at the expense of hardworking citizens?

Before World War I, Canada did not have a personal income tax. The federal government relied primarily on tariffs, customs duties, and excise taxes to generate revenue. However, with the financial strain of funding a major war effort, Prime Minister Robert Borden introduced the Income War Tax Act of 1917.

✔️ The Promise: The government insisted this tax was a short-term necessity to support the war effort and that once the war ended, the tax would be repealed.
✔️ The Initial Rate: Canadians earning over $2,000 annually (equivalent to about $40,000 today) were subject to a 4% tax, while higher earners paid up to 25%.

Despite these assurances, the tax never disappeared—and instead became a permanent and ever-expanding burden on Canadian citizens.

While taxation is a legal function of government, the perpetual expansion of income tax raises serious ethical and constitutional concerns:

✔️ Breach of Original Promise: The tax was explicitly introduced as a temporary measure, yet over 100 years later, it has grown exponentially instead of disappearing.

✔️ Government Overreach: The current tax burden is far beyond what the Income War Tax Act intended. The government now claims a large portion of income without sufficient transparency or justification.

✔️ Erosion of Financial Freedom: A significant portion of Canadian wages is now seized through direct payroll deductions, giving workers little control over their earnings.

✔️ Inefficiency & Waste: Much of the tax revenue is spent on government inefficiency, bureaucracy, and questionable expenditures rather than benefiting taxpayers.

The Burden on Modern Canadians

❌ High Tax Rates: The average Canadian pays between 25-50% of their income in various taxes when all levels of taxation (federal, provincial, sales, property, etc.) are considered.

❌ Hidden & Layered Taxes: Beyond income tax, Canadians pay GST/HST, payroll taxes, carbon taxes, property taxes, excise taxes, and more—making the total tax burden significantly higher than what is officially reported.

❌ Diminishing Returns: Despite record-high tax revenue, public services continue to deteriorate—longer healthcare wait times, housing crises, and public debt skyrocketing.

What Can Be Done?

1. Demand Tax Reform: Canadians must push for transparent, simplified taxation, including caps on government spending and tax reductions.
2. Educate the Public: Many citizens accept high taxation as normal—but historical context proves that it was never meant to be permanent or this extreme.
3. Hold Politicians Accountable: Governments have used false promises to justify taxation for over a century. Voters must demand real tax relief from their representatives.
4. Support Alternative Economic Models: Exploring flat tax systems, consumption-based tax structures, or decentralized taxation could provide a fairer and less exploitative approach.

Taxation Without End – The Legacy of a Broken Promise

The “temporary” income tax of 1917 has transformed into a permanent financial drain on Canadians, growing unchecked while delivering diminishing benefits. What began as a wartime necessity is now a system of wealth extraction with no clear limitations or accountability.

The question remains: Will Canadians ever reclaim the financial freedom that was promised to them, or will the cycle of endless taxation continue unchecked?

If you’re seeking to advocate for tax reform in Canada, reaching out to key federal officials and organizations involved in tax policy is a constructive approach. Below is a list of relevant contacts:​