Everyone that works has to pay income tax.
In addition to income tax, employment insurance(EI) and Canada pension plan(CPP) deductions are also made. If you loose your job through no fault of yours (i.e you were not fired), you will be eligible to apply for EI benefits to help you provide for yourself while you look for another job. CPP deductions is for retirement time.
Yes, they can claim income tax return and if they qualify will receive a refund and quarterly GST payments. With fees, they get a T4A slip from school and claim the tuition and books credits. Most students simply carryover these tuition credits until they finish their degree and start working.
These credits can be used to reduce your tax burden... some people are able to receive all of their income tax back (especially if you work a full year and are earning a higher salary).
The other benefits of our income tax is, it goes towards healthcare, maintaining roads, etc. This is how we are all able to see the doctor without having to pay upfront.
