Ontario’s low-income tax credit not as good for workers as $15 minimum wage, new report says

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Ontario’s low-income tax credit not as good for workers as $15 minimum wage, new report says


Workers would have been better off with a minimum wage increase to $15 than Premier Doug Ford’s low-income tax credit, which will cost $1.9 billion over four years and add to the deficit, says Ontario’s independent financial watchdog.

That’s because cancelling the previous Liberal government’s planned $1 increase in the minimum wage means the province will take in less in tax revenue to offset the cost of the Low-Income Individuals and Families tax credit tax credit, Financial Accountability Officer Peter Weltman said in a new report Tuesday.

Ontario Premier Doug Ford government froze Ontario’s minimum wage at $14 last fall.
Ontario Premier Doug Ford government froze Ontario’s minimum wage at $14 last fall.  (Christopher Katsarov / The Canadian Press)

“Many minimum wage earners do not pay provincial tax therefore they will not benefit from the LIFT credit,” Weltman added.

He noted, however, about 90 per cent of minimum wage earners will not pay provincial income taxes under LIFT, compared with 78 per cent previously.

Ford campaigned last spring on the low-income tax credit as an alternative to a $1 minimum wage increase he warned would hurt business and kill jobs.

Weltman’s office estimated one million Ontarians will get an average LIFT tax credit of $409 this year at a total cost to the treasury of $418 million.

But there are 1.3 million Ontarians who would have enjoyed average after-tax gains of $810 a year under a $15 minimum wage that had been slated to take effect in January, the report said.

Only 38 per cent of minimum wage earners in Ontario will receive the low-income tax credit, according to the report.

Finance Minister Vic Fedeli defended the low-income tax credit.

“The Liberals’ too much, too soon approach on the minimum wage cost Ontario thousands of part-time jobs,” he said in a statement. “Our government took a balanced approach. By pausing the increase in minimum wage our government has given businesses time to adjust.”

Former premier Kathleen Wynne raised the $11.60 hourly minimum wage to $14 in 2018, a sharp increase of $2.40 she argued was necessary to help workers cope with rising costs of living.

Under the Progressive Conservatives, the $14 minimum wage is frozen until October 2020.





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