VANCOUVER—Contrary to rhetoric from Ottawa, the majority of lower-income Canadian families with children pay higher federal personal income taxes due to tax changes made by the federal government since 2015, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“The federal government has repeatedly asserted personal income taxes were reduced to help alleviate financial pressure on families, when in fact, Ottawa has increased the personal income tax burden for many of those very families that can least afford it,” said Jake Fuss, senior economist at the Fraser Institute and co-author of Impact of Federal Income Tax Changes on Canadian Families in the Bottom 20 Percent of Earners, 2022.
Ottawa paints an incomplete picture of the overall impact of their tax changes
In 2015, the government reduced the second-lowest personal income tax rate (from 22 per cent to 20.5 per cent)—but also eliminated income-splitting for couples with children under 18 and a number of tax credits, which more than offset the savings from the tax rate reduction.
As a result, 60 per cent of taxpaying families with children in the bottom 20 per cent of income earners (families with income below $70,991 in 2019) paid more federal personal income tax. Specifically, they’re paying, on average, $233 more compared with 2015.
The study compared federal personal income taxes for families with children in 2015 versus 2019 using a model by Statistics Canada, which includes information for more than 1 million Canadians in over 300,000 households with approximately 600 variables included for each individual.
“By promoting one income tax change and downplaying others, Ottawa paints an incomplete picture of the overall impact of their tax changes, which have imposed a higher personal income tax bill on the majority of lower-income families with children,” said Fuss.
Media Contact:
• Jake Fuss, Senior Economist, Fraser Institute
• Jason Clemens, Executive Vice-President, Fraser Institute
To arrange media interviews or for more information, please contact:
Drue MacPherson, Fraser Institute
drue.macpherson@fraserinstitute.org
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit fraserinstitute.org.
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