Our federal tax burden has escalated during the past decade and the federal government is finally offering some relief to tax-weary Canadians.

We have the taxation system under our microscope and we have introduced tax breaks for those who need them most. With the new school year now nicely under way, student life is made easier by our Textbook Tax Credit and the new tax exempt status for scholarships and bursaries. We also removed the $4,000 annual contribution limit for Registered Education Savings Plans because we believe education is a core element of a thriving economy.

Tax talk has a tendency to prompt cynicism, because Canadians have been paying too much for too long. On the positive side, our overall economy is in good shape and getting better. During the first quarter of this year, employment in Canada grew by 3.9 percent, personal income increased 8.4 percent and Gross Domestic Product growth was up by 3.7 percent. These factors combine to tell us that we, as a country, are doing something right.

Let’s a take quick look at where your hard-earned taxes go. The money is dispersed in a variety of ways back into the hands of deserving Canadians.

For the fiscal year ending March 31, 2006, Canada's federal government collected $222.2 billion in taxes and other revenues. The largest single federal spending item was interest payments on Canada's public debt, which is money borrowed by the central government over the years that has yet to be repaid to the lenders. These payments to institutions and people who hold federal bonds, treasury bills and other forms of the debt cost $33.8 billion. That’s just over 15 cents of every tax dollar.

The government also makes cash transfer payments that go directly to individuals, provincial and territorial governments, and other organizations. There are three major categories of transfers that account for just over 53 cents of each tax dollar, which is $118 billion. Your tax dollars help to make direct payments to people, which accounts for about 23 cents of every tax dollar, or $52.6 billion, including payments to eligible elderly Canadians through Old Age Security payments, the Guaranteed Income Supplement and the Allowance for spouses. Support for seniors was the second largest spending item in the federal budget at 13 cents of your tax dollar, which amounts to$29 billion.

Employment insurance benefits paid out were $14.4 billion and the government provided $9.2 billion in direct cash payments to eligible families for children under age 18 through the Canada Child Tax Benefit. That’s just over 4 cents of every tax dollar.

One of the smallest slices of federal operating spending goes to Parliament -- total spending in 2005-06 was about $495 million, which is less than one-quarter of a cent of every tax dollar.

There are many other avenues that deliver tax money to Canadians, and it seems less painful at tax time to remember that your contribution helps the government help others.

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