Friday, December 21, 2012

Give Canada’s working poor a raise

Federal Finance Minister Jim Flaherty introduced the Working Income Tax Benefit back in 2007. It needs a boost.

When Ottawa slams the door, Ken Battle opens a window. When Queen’s Park yanks down the sash, Sherri Torjman approaches the municipalities, the private sector and the public to spearhead the fight against poverty.

They refuse to give up. That is what has kept the Caledon Institute on Social Policy going for 20 years. Battle is its president; Torjman is vice-president.

The think-tank produces ideas that are pragmatic, suited to the tenor of the times and compatible with the objectives of the party in power.

Its latest campaign, launched this month, is to win parliamentary support for an increase in the Working Income Tax Benefit, a refundable tax credit introduced by Finance Minister Jim Flaherty in 2007. Its purpose is to “make work pay” by topping up the earnings of the low-wage employees.

An estimated 1.5 million Canadians receive the benefit. It costs $1.1 billion a year.

Anyone with an earned income between $3,000 and $17,477 a year can apply. The maximum payment is $970 for an individual, $1,762 for a family. How much a worker receives depends on his or her earnings, other income, marital status, number of dependants and province of residence.

The benefit has been a godsend to the working poor. When it was introduced, it delivered a maximum of $500 to individuals and $1,000 to families. Three years ago, rates were raised to the current level.
But there is still one problem: It doesn’t lift most low-wage households out of poverty. The Caledon Institute outlines three ways to rectify that:

  Increase the maximum benefit.
  Broaden the eligibility criteria to include all minimum wage 
  Combine the two adjustments.

“Caledon has always been conscious of the cost of any proposal and we recognize that this is a tough time to be recommending new expenditures,” Battle and Torjman point out in their 16-page policy paper. “But there are several areas of wasteful spending which deliver substantial benefits to high-income households. We believe these funds can be better directed toward packing a solid punch on poverty.”

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