The Latest Ralph Goodale Weekly Report:
TAX CREDITS EXCLUDE THE MOST IN NEED
The recent federal budget discriminates against lower-income families.
The problem flows from the Harper government’s use of “tax credits” as their way of favouring certain categories of Canadians – i.e., if you do certain things, you can claim a credit against the federal taxes you would otherwise have to pay.
The budget offered three such tax credits – one for those providing homecare services to dependents, another for volunteer firefighters, and a third for parents who put their kids into arts programs. It all sounds quite attractive.
But there’s a catch.
To benefit, you must have an income high enough to result in taxes owing to the federal government. The credit is applied against those taxes owing. If your income is so low that you have no taxes owing, you get no benefit.
Ask yourself – which caregivers, or kids, or volunteer firefighters are in the greatest need of a little help from the Government of Canada?
Surely it’s those with the lowest incomes. But they’re exactly the ones who cannot qualify for tax credits. They’re excluded because their incomes aren’t high enough to be taxable.
How many Canadian families are in this boat?
About 25 million people file tax returns every year in Canada. Some 15 million of them have incomes high enough to pay taxes, while 10 million do not. It’s that group of 10 million low-income families who get left out. A tax credit doesn’t work for them.
The federal government can fix this problem. They should pay the value of their tax credits in cash to those low-income caregivers, volunteer fire fighters and parents of children in arts programs who otherwise qualify, but just don’t have taxable incomes.
The benefits should not go only to middle and higher income Canadians, to the exclusion of families of more modest means.