Previous findings reported by the Fraser Institute reportedly overlook new benefits
In September, the Fraser Institute released a study claiming that eight out of 10 middle-class families with children have had their incomes hurt by federal Liberal tax policies instituted in 2016. But one policy expert is saying that other changes more than make up for what’s been lost.
“The analysts’ findings are dominated by the abolition of income splitting for couples with children — the so-called family tax cut (FTC),” Rhys Kesselman, Canada Research Chair in public finance at Simon Fraser University’s School of Public Policy, wrote in a piece published by the Financial Post.
However, he said the institute’s analysis ignores “Liberal reforms to tax and transfer provisions for children in implementing the Canada Child Benefit (CCB).” He noted that while the CCB reforms did away with the FTC, the Canada child tax benefit, the national child-benefit supplement, and the universal child-care benefit (UCCB), the new system delivers larger benefits than the provisions it replaced.
Jamie Golombek, managing director of Tax and Estate Planning at CIBC Private Wealth Management was quoted as saying “The Canada Child Benefit makes the system a lot easier, a lot cleaner and a lot tighter, and also a lot easier to administer … The majority of people we speak to about it are quite positive because they’ll get more money.”
Kesselman noted that unlike the UCCB, the new CCB benefits are non-taxable and automatically paid based on tax filings. A cut in the middle-income tax bracket by the Liberals provides an additional income boost.
The biggest gainers from the CCB program, Kesselman said, are single-parent families, which were unable to benefit from the now-defunct FTC. “Even a majority of two-parent families had gained little (less than $500) or nothing from the FTC, so they too are substantial gainers,” he said.
He argued further that the FTC had mostly benefited higher-income, one-earner couples, who needed the benefits least, and that the old policy had discouraged mothers from entering or re-entering the labour force after giving birth.
“So the shift from the FTC and Conservative government’s companion child tax and transfer policies to the Liberal government’s CCB was analogous to taking some money from families, but returning even more to them,” Kesselman said. “Were families actually worse off because dollars received as transfers are less valued than dollars lost via tax changes?”
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“The analysts’ findings are dominated by the abolition of income splitting for couples with children — the so-called family tax cut (FTC),” Rhys Kesselman, Canada Research Chair in public finance at Simon Fraser University’s School of Public Policy, wrote in a piece published by the Financial Post.
However, he said the institute’s analysis ignores “Liberal reforms to tax and transfer provisions for children in implementing the Canada Child Benefit (CCB).” He noted that while the CCB reforms did away with the FTC, the Canada child tax benefit, the national child-benefit supplement, and the universal child-care benefit (UCCB), the new system delivers larger benefits than the provisions it replaced.
Jamie Golombek, managing director of Tax and Estate Planning at CIBC Private Wealth Management was quoted as saying “The Canada Child Benefit makes the system a lot easier, a lot cleaner and a lot tighter, and also a lot easier to administer … The majority of people we speak to about it are quite positive because they’ll get more money.”
Kesselman noted that unlike the UCCB, the new CCB benefits are non-taxable and automatically paid based on tax filings. A cut in the middle-income tax bracket by the Liberals provides an additional income boost.
The biggest gainers from the CCB program, Kesselman said, are single-parent families, which were unable to benefit from the now-defunct FTC. “Even a majority of two-parent families had gained little (less than $500) or nothing from the FTC, so they too are substantial gainers,” he said.
He argued further that the FTC had mostly benefited higher-income, one-earner couples, who needed the benefits least, and that the old policy had discouraged mothers from entering or re-entering the labour force after giving birth.
“So the shift from the FTC and Conservative government’s companion child tax and transfer policies to the Liberal government’s CCB was analogous to taking some money from families, but returning even more to them,” Kesselman said. “Were families actually worse off because dollars received as transfers are less valued than dollars lost via tax changes?”
For more of Wealth Professional's latest industry news, click here.
Related stories:
Higher federal taxes hurt middle-class families – study
Research shows average Canadian family tax spend of $30k + last year
