Thank you, Mr. Chair.
The reason why we want this testimony and why we believe it's so critical is there are a number of issues that our leader, Pierre Poilievre, has outlined in a number of great speeches. One of those issues, which I'm particularly compelled by and I think this budget will make far worse, is the issue of having paycheques go further. Paycheques are being continually and increasingly eroded by an ever-growing and ever-expanding federal government that takes more and more of the proverbial oxygen from the room.
As I started talking about before, there is a great article written for the C.D. Howe Institute by Alexandre Laurin and Nicholas Dahir called “Softening the Bite: The Impact of Benefit Clawbacks on Low-Income Families and How to Reduce It”. I'll continue where I left off. For those who didn't catch the summary, Hansard is available.
Tax benefits are government payments to individuals. The largest are old age payments to seniors and benefits to families with children. Childrens’ benefits play an important role in the reduction of child poverty by providing income support to low-income families.
It goes on and says:
Governments must balance redistributive objectives with the effects of these tax benefits on the public purse. As families earn more taxable income, 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. Benefit reductions, however, act like hidden tax rates: they reduce the effective gain from working to generate additional income. To determine the tax system’s full impact on a family’s financial gain from work, the combined effect of both taxes paid and cash benefits reduced must be taken into account.
This Commentary presents various estimates of effective tax rates on personal earnings for families with children. These effective rates play a key role in family work decisions by reducing the monetary reward of earned income.