- The top twenty percent of Canadian families pay fifty-eight percent of taxes despite earning half the income.
- Cyprus’s twenty twenty-six tax reform benefits highest earners most with over one thousand euros in gains.
- The lowest-income earners in Cyprus saw only five euros annually in additional disposable income.
- The Canadian tax share rises to sixty-five percent when looking specifically at personal income tax.
The Fraser Institute said a 2026 Canadian study found that the highest-income families pay a larger share of taxes than the share of family income they receive, while a separate Cyprus study reached a similar conclusion about that country’s latest reform.
In Canada, the top 20% of families receive 49.5% of total family income but pay 58.3% of all taxes, according to Measuring Progressivity in Canada’s Tax System, 2026. Their share rises to 65.3% when the measure is limited to personal income tax.
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The Cyprus reform produced a sharply different distribution of gains. The lowest income decile receives an average annual increase of €5 in disposable income, compared with €1,057 for the highest income decile.
The reform took effect on January 1, 2026. It costs the Cypriot government an estimated €240 million annually.
The two studies examine different systems. Canada’s figures describe who pays taxes and receives income, while Cyprus’s analysis models the effects of a specific reform.
Jared Walczak, a fellow at the Fraser Institute, said the Canadian evidence does not support claims that high earners are failing to pay their “fair share” of taxes.
The Central Bank of Cyprus, meanwhile, said its reform did little to improve the distribution of national income because lower-income groups gained almost nothing.
The Canadian figures show tax payments concentrated above income shares
The Canadian report compares families by income position. Its headline figures show a larger tax contribution from the highest-income group than its share of family income.
| Family group or measure | Share of total family income | Share of total taxes | Share of personal income tax |
|---|---|---|---|
| Top 20% of families | 49.5% | 58.3% | 65.3% |
| Bottom 20% of families | 4.3% | 1.7% | Not specified in the study |
The figures alone establish a distributional gap. They do not, by themselves, settle whether tax rates are fair or whether further increases should be adopted.
The institute uses the comparison to challenge arguments that high earners need to pay more to meet a fairness objective. Walczak said the evidence instead shows that the highest-income families already supply a disproportionate share of tax payments.
The measures must be kept separate. The 58.3% figure covers all taxes counted in the study, while 65.3% covers personal income tax alone.
The bottom group shows the reverse relationship. It receives 4.3% of family income and pays 1.7% of total taxes.
Cyprus raised the tax-free threshold but delivered its largest gain at the top
The Cyprus working paper, Assessing the Distributional and Fiscal Impacts of Cyprus’s Personal Income Tax Reform, used EUROMOD microsimulations to assess changes that began in 2026.
| Reform measure | Before | After or result |
|---|---|---|
| Tax-free threshold | €19,500 | €22,000 |
| Fourth bracket taxed at 30% | €36,301–€60,000 | €42,001–€72,000 |
| Individuals liable for income tax | 245,199 | 190,631 |
| Average disposable-income gain, lowest decile | Not applicable | €5 annually |
| Average disposable-income gain, highest decile | Not applicable | €1,057 annually |
| Estimated annual cost to public finances | Not applicable | €240 million |
The number of people liable for income tax fell by 22.3%, from 245,199 to 190,631. Approximately 54,000 low earners left the tax rolls entirely.
The reform did not provide refundable credits or major deductions for people already below the threshold. As a result, the lowest-income households saw little change in their net income despite the higher tax-free limit.
The paper was written by Aris Avgousti of the Research and Policy Centre, Charalambos Michael of the Economic Analysis and Monetary Policy Section, and Georgiana Photiadou of the Research and Policy Centre, all at the Central Bank of Cyprus.
The authors wrote that the reform “does little to advance its stated goal of a fairer distribution of national income, since lower income groups see almost no benefit.”
They also warned that the foregone revenue could have supported other priorities:
“Every tax cut carries an opportunity cost: the same money could instead have gone toward public investment in education, innovation, infrastructure or social protection.”
Cyprus lawmakers narrowed the original proposal before adoption
The reform marked Cyprus’s first major overhaul of its tax system in 23 years. The government initially proposed expanding the 30% bracket to €80,000, but parliamentary debate reduced the upper limit to €72,000.
Officials presented the package as a response to inflation and a way to support the middle class. The wider fourth bracket nevertheless increased the room for higher earners to benefit from the new structure.
Finance Minister Makis Keravnos defended the changes and said critics should “weigh all the data.” He also argued that raising the tax-free limit to €22,000 meant “most of the low-paid will not be taxed at all.”
Keravnos had previously called the package a “step toward fairness, competitiveness, and fiscal sustainability.”
Christiana Erotokritou, chair of the House Finance Committee, oversaw the legislative process. She invited stakeholders to help ensure that the package supported the middle class while preserving a “spirit of broad consensus.”
The corporate tax rate also increased, from 12.5% to 15%, to align with OECD and European Union standards under Pillar Two. Business groups generally welcomed the abolition of deemed dividend distribution on profits after January 1, 2026.
They also supported reducing the special defense contribution on dividends from 17% to 5%, citing improved competitiveness.
The Cyprus reform faces pressure over fiscal space and living costs
The International Monetary Fund’s June 2026 Article IV consultation welcomed the modernization but called for “continued vigilance” over fiscal space and the banking sector’s exposure to real estate.
Labor concerns emerged as well. Senior Ministry of Labour figures said unresolved disputes could “flare up” if workers concluded that the reform had not addressed rising living costs for low-wage earners.
The contrast between the Canadian and Cypriot findings is therefore not a direct country ranking. Canada’s report measures the existing allocation of tax payments and family income, while the Cyprus paper measures projected gains from new thresholds, brackets and related measures.
In Cyprus, the reform’s largest modeled disposable-income increase was €1,057 for the highest income decile. The lowest income decile’s average gain was €5.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
