Despite widespread discourse about redistributive politics and attendant policies, economic inequality remains a persistent problem in contemporary liberal democracies. Not only is economic inequality potentially detrimental for individual social, economic and health outcomes (e.g. Mathew and Broderson 2017); recent work also shows that rising inequality likely undermine trust in government and democratic values (Schauer 2025). At the same time, accurate perceptions of economic inequalities are uncommon (Gimpelson and Treisman 2017). From these broader insights, this paper considers two questions about economic inequality in Canada. First, we explore the influence of actual local economic inequalities (based on the construction of a localized GINI index) on perceptions of economic inequalities net of demographic, attitudinal and political identities. Second, we investigate the influence of perceptions of economic inequality on democratic values and engagement in Canada. We draw on the Canadian Provincial Election Surveys (collected from 2020-2023) and Statistics Canada data to estimate the sources of perceptions about economic inequality and their impacts. Findings contribute to understanding the local sources of inequality perceptions and suggest Canadians tend to underestimate local economic inequality, while those who accurately perceive inequality typically hold more skeptical views of Canadian democracy.