The Morning After: A Post-Binge Federal Shadow Budget for 2023
With the worst of the COVID-19 pandemic behind us, a concerning trajectory of federal spending has become clear. The economic rebound and higher inflation have boosted federal revenues, and the government is spending almost all the new money.While some new spending is arguably effective in improving Canadian wellbeing, most is not. Federal compensation costs are […] Shadow Budget 2023 with Bill Robson and Don Drummond
In episode three of the C.D. Howe Institute Podcast, we ask what should Federal Budget 2023 look like? According to the C.D. Howe Institute’s CEO Bill Robson and Fellow-in-Residence Don Drummond, Ottawa needs to reign-in spending or risk re-accelerating inflation. But what about climbing debt loads, a healthcare system in crisis, and the constant march of climate change?
Laurin, Dahir – How Clawbacks Hurt Lower Income Parents
To: Diane Lebouthillier, Minister of National Revenue From: Alexandre Laurin and Nicholas Dahir Date: January 6, 2023 Re: How clawbacks hurt lower income parents Parents across the country may be thinking about taking on an extra shift or an extra job to pay off holiday bills or keep up with the rising costs of day-to-day items. What these hard […] The tax system is stacked against low-income parents – Globe and Mail Op-Ed
Parents across the country may be thinking about taking on an extra shift or an extra job to pay off bills from the holiday season or keep up with the rising costs of day-to-day items. What these hard working parents pocket from extra work not only depends on the taxes they pay on that additional income, but also on how much their income-tested government benefits such as the Canada Child Benefit or the Canada Workers Benefit will be reduced or “clawed back.”
In a recent C.D. Howe Institute study, we calculate the total impact of taxes and benefit clawbacks on families with children, giving us what we call “effective” tax rates. We found that parents in low-income families in particular face high effective tax rates. For instance…
Bringing Home Less Than Half: METRs for Low-Income Families With Children
The tax system’s full impact on a family’s financial gain from work depends on the combined effect of both taxes paid and cash benefit reductions or benefit “clawbacks.” Benefit clawbacks act as hidden tax rates since they reduce the effective gain from working as a way to generate additional income. Income-tested benefits are clawed back […] Softening the Bite: The Impact of Benefit Clawbacks on Low-Income Families and How to Reduce It
As families earn more taxable income, government benefit entitlements are reduced (or “clawed back”) at various phase-out rates, which reduces their overall cost for governments and ensures that they remain targeted to the intended lower-income families. However, benefit reductions act like hidden tax rates: They reduce the effective gain from working to generate additional […] Laurin, Robson – Let’s Stop the Added Inflation Pain from Creeping Taxes
From: Alexandre Laurin and William B.P. Robson To: Canada’s Tax Collectors Date: November 24, 2022 Re: Let’s Stop the Added Inflation Pain from Creeping Taxes On the same day last week, we learned the consumer price index was up 6.9 percent year over year in October, and how much the federal government’s inflation-indexed tax may raise the price of […] Miville Tremblay – The False Choice Between Inflation and Employment
From: Miville Tremblay To: Canada’s Inflation Watchers Date: November 21, 2022 Re: The False Choice Between Inflation and Employment One cannot choose a combination of employment and inflation the way we shower with our mix of hot and cold water. So, if the Bank of Canada wants to maximize employment in a sustainable way, it must […] Inflation is bad enough. Taxes shouldn’t make it worse – Financial Post Op-Ed
This week we learned the consumer price index was up 6.9 per cent year over year in October on the same day we got predictions about how much the federal government’s inflation-indexed tax will raise the price of beer. Inflation and tax rules often combine to increase Canadians’ tax burdens. Governments seem readier to adjust taxes for inflation when doing so makes the burden heavier than when it makes the burden lighter. That should change.
Adjusting some tax rules for inflation is easy. Most taxes on employment income and government benefit payments use thresholds that rise as prices do. The federal government indexes personal income tax thresholds, benefit payments and most tax credits to the CPI. But some provinces do not.…
Why Canada’s economic forecasts must factor in climate change – Ottawa Citizen Op-Ed
Canada’s Parliamentary Budget Office just did something important and long overdue. For the first time, the country’s official financial watchdog quantified the costs of climate change for Canada’s economy, showing that worsening climate impacts are a drag on economic growth. This is a crucial step in beginning to reduce the economic risks Canada can expect in a warming world.
There’s still a long way to go, however, and recent moves by Australia and the United Kingdom can point us in the right direction.
In Canada, our long-term economic projections are largely based on historical averages of productivity that do not account for the fact that the climate is now changing rapidly, bringing with it more…
Godbout, St-Cerny – La face cachée de l’Allocation canadienne pour enfants
De: Luc Godbout et Suzie St-Cerny À: Chrystia Freeland, Ministre des Finances et Karina Gould, Ministre de la Famille, des Enfants et du Développement social Date: 1 novembre 2022 Objet: La face cachée de l’Allocation canadienne pour enfants Au fil des années, les mesures fiscales fédérales pour enfants ont évolué pour converger vers une prestation unique au titre […] Godbout, St-Cerny – A Dark Side to the Canada Child Benefit
From: Luc Godbout and Suzie St-Cerny To: Chrystia Freeland, Minister of Finance Cc: Karina Gould, Minister of Families, Children and Social Development Date: November 1, 2022 Subject: A Dark Side to the Canada Child Benefit Over the years, federal tax measures for children have evolved into a single benefit under the Canada Child Benefit (CCB), which is relatively […]