Thank you, Mr. Easter, and thank you to the committee for the invitation to speak today on Bill C-74.
Overall, I believe that this was a positive budget, and this implementation bill of that budget reflects items that the Canadian Centre for Policy Alternatives has been advocating for through its alternative federal budget for several years.
The gender analysis in particular was a strong and important addition to the budget process, but in my limited time here today, I'd like to focus on two items: the new Canada workers benefit, and the closure of tax loopholes used by a small number of private corporations.
With respect to the working income tax benefit and its transformation into the Canada workers benefit, I commend the budget for the decrease in those living in poverty by about 70,000 due to this measure. I believe this builds on other measures, including the Canada child benefit and the guaranteed income supplement, which, when fully implemented, will lift roughly 500,000 Canadians out of poverty, although three million to five million Canadians live in poverty, depending on the year and the measure, so there is plenty of work to be done.
Eliminating poverty in Canada remains an important and worthy goal. Tracking how measures impact it should be part of budget reporting, as it was in the case with the Canada workers benefit, but it's not always the case.
I believe the automatic enrolment feature of the Canada workers benefit is a crucial if underrated change in this program. It's a seemingly small change, but a very important principle, and far from universal in federal benefits. I hope the committee agrees that automatic enrolment should be extended across all federal transfer programs, not just in the Canada workers benefit.
Transfers should not have to be applied for, given that for many the only requirement is inadequate income, which is often already known by the CRA. I encourage the committee to conduct an investigation of any federal transfers or benefits where take-up rates are not 100% and determine how we could get there. One place to start is the Canada child benefit, which is not universally received by low-income families in first nation communities due to low filing rates on reserves.
With respect to the Canada workers benefit, the one item I am concerned with is the potentially dangerous distinction between “deserving” versus “undeserving” poor. At present, support for low-income families is not universal. Only those families who work, or who have children, or who are seniors “deserve” support. If you can't work, federal support is almost non-existent. The only support that a family would receive through the tax system is the GST credit, which is worth at most just under $300 a person.
One of the particular groups that falls between the cracks is that of those aged 50 to 65 who no longer have children and live alone, either in a couple or not. They don't receive the Canada child benefit, as the children have moved out, and they don't yet receive seniors' supports because they're not old enough. Poverty in this group is driven by high disability rates that skyrocket in this age group, either because those folks have worked hard, have been injured, and can no longer work, or because they are caring for spouses who can no longer work. Often, these families see big improvements as they turn 65 and gain access to important programs, such as old age security and the guaranteed income supplement, but in the interim, those Canadians often end up on social assistance, and in most provinces, at rates that are often inadequate.
In our alternative federal budget, we have examined the possibility of extending the GST credit and creating a top-up to the GST credit to support the lowest-income Canadians and also to capture this key group that currently falls through the cracks. This top-up would be worth up to $1,800 a person, but would be reduced more quickly than the GST credit to focus the benefit on the lowest-income families. I encourage members to read a more detailed analysis in our alternative federal budget.
In terms of the closure of the income sprinkling and passive income tax loopholes for private corporations this year, I would express my support, as I have in the past. I think there are clear equity implications, in that wealthy individuals who are paid in particular ways could reduce their tax bill while regular wage earners could not, and those regular wage earners would end up picking up the tab through taxation for the government services that we all enjoy.
It is clear that these abuses were restricted to a small group of private corporations, with a few small businesses actually affected, although I see little economic reason for lowering the small business tax rate as some form of compensation. The small business tax rate is built for one reason—to encourage the reinvestment of profits into the business instead of them being withdrawn by owners.
Neither income sprinkling nor the use of private corporations as a store of passive income have anything to do with reinvestment in the business and are merely ways of reducing personal taxes. As such, their closure would have little impact on business decisions to reinvest profits. If anything, the now larger disparity between the small business tax rate and the general corporate rate will likely further encourage other forms of aggressive tax planning, such as the ones that were just closed.
More broadly, I hope that this committee will focus on tax loopholes, not just with respect to private corporations but in a more wholesome examination of tax expenditures. I hope the committee will continue its examination of who benefits from tax expenditures, and continue to evaluate tax expenditures as if they were program expenditures that should undergo the same type of analysis. Not only that, but also examine the distribution analysis of tax expenditures with the goal of closing those tax expenditures and raising more money for other programs and other public services.
I thank the members for their time and I look forward to your questions.