Thank you very much, Mr. Easter.
My name is Kevin Milligan. I am a professor of economics at the Vancouver School of Economics. I've been asked to speak specifically about the new Canada workers benefit.
I've been studying the impact of tax benefits for modest-income workers for about 15 years, and the evidence from around the world is unusually strong and consistent. Benefits that are focused on providing incentives for modest-income workers to join the workforce have been successful in the United States, the United Kingdom, and also here in Canada.
However, the existing working income tax benefit, WITB, suffers from two shortcomings. The first is that it is too small. The maximum benefit for a single worker under the 2017 configuration is only about $1,000. That means that the benefit is all gone by the time someone reaches about $18,000 of income. If you're a full-time, full-year minimum wage worker in most provinces, you see absolutely no benefit from the existing WITB. I think that misses the mark.
The second shortcoming is that the existing WITB lacks salience. It's hidden away on the tax form, requiring the filing of a special supplemental schedule, so people are often not even aware of it. This has resulted in a substantial number of people who are eligible for the WITB but don't end up getting the benefit.
The proposed transition to the new Canada workers benefit makes some substantial and important improvements in ameliorating both of these shortcomings. The new Canada workers benefit is larger. The maximum benefit is 30% larger for singles, and 24% bigger for couples and those with kids. As importantly, the income range that is now covered by the new Canada workers benefit is much larger. It extends up to about $24,000 for singles, and up to $36,000 for couples and those with kids. This means that a much larger proportion of modest-income working Canadians will see some benefit under this new Canada workers benefit than was the case under the old WITB.
The new Canada workers benefit will also be easier to access. In a new and very important initiative, the Canada Revenue Agency will check everyone's tax filing to make sure that the tax filer has applied for the Canada workers benefit if the person is eligible. If they haven't applied, they will automatically be enrolled for this benefit. This starts in 2019. Moreover, the government has indicated that it will explore ways to make the Canada workers benefit payable on a monthly basis rather than lumped in with the other aspects of the tax filing done annually.
Both of these measures, higher benefits and making benefits easier to access, are important advances. However, there is still some more work to do, and I have three brief ideas.
First, I think benefits still need to be larger. If you think about someone who is a full-time, full-year worker—that means about 2,000 hours a year of work—and the minimum wage in some provinces approaching $15 an hour, if you multiply those together, you get about $30,000 of income for a full-time, full-year worker. I think that ought to be a target for the income range for the WITB. It's currently at $24,000 for singles. I think we ought to try to get that up to $30,000.
Second, I think the government should continue its efforts to make the benefit more salient. Economists like me spend a lot of time trying to design these kinds of programs that provide incentives for rewarding work and for promoting good behaviour, but if the incentives are buried in complexity, we're not going to see the full realization of the benefit that we want to see. We want to make sure that the benefit is salient, easy to access, and people can get the benefits that they've earned.
Finally, the government should undertake a study of the feasibility of individualizing the Canada workers benefit. This has been advocated by Professor Tammy Schirle at Wilfrid Laurier University.
Individualizing means that the benefit is phased out based on one's own income rather than on a couple's income. This would have an important impact on married people, and specifically on married women as that would give married women a boost both within the economy and within our society. I think it's worthy of some more study.
I'm looking forward to your questions, and I pass it back to the chair.