Lowest earners have most to gain

TheStar.com – Ontario – Lowest earners have most to gain: But more than 90% across province to get modest break
March 27, 2009.   Laurie Monsebraaten, Social Justice Reporter

Ontario’s Liberal government is providing modest tax breaks to more than 90 per cent of Ontario taxpayers, but is offering its most significant cuts for those at the lowest income levels.

Its centrepiece, announced in yesterday’s budget, is a drop in the rate of the bottom tax bracket to 5.05 per cent from 6.05 per cent on the first $36,848 of taxable income starting next January.

Under the budget provisions, 93 per cent of Ontarians would pay less personal income tax and Ontario would have the lowest provincial tax rate in Canada for those in the lowest tax bracket, Finance Minister Dwight Duncan said.

And beginning next year, 90,000 more Ontarians would no longer pay provincial income tax and 725,000 low-income taxpayers would have their taxes further reduced, budget documents show.

But opposition leaders attacked the province for hiking taxes on everything from home heating and electricity to haircuts and take-out coffee with a harmonized sales tax.

“The government is bribing taxpayers with their own money,” said Progressive Conservative interim leader Bob Runciman.

“The government has provided no money to help those who need it the most,” added NDP Leader Andrea Horwath, who argued the tax breaks won’t offset new sales taxes.

Under the proposed budget, a single person with net earnings of $13,700 would pay no provincial income tax, while a single parent with one child, earning $29,800, would pay no tax, finance ministry officials said. A couple with two children earning $42,500 (with one spouse earning 70 per cent of the family income) would pay no provincial income tax, they said.

About 2.9 million low- and moderate-income households would also receive up to $260 per year in enhanced sales tax credits for each adult and child to be paid quarterly starting in July, 2010. The new measure would be one of the most generous refundable sales tax credits in Canada, Duncan said. The credit would go to families with net incomes of $25,000 or less and to individuals earning $20,000 or less, according to the budget.

This would be in addition to a one-time transitional sales tax benefit of $1,000 for families with incomes up to $160,000 to help defray extra costs to the new harmonized sales tax. Individuals with incomes up to $80,000 would get $300.

Ontario’s middle class would also receive some relief. A couple with two children with a combined net income of $70,000 would be $940 better off next year and $565 better off in 2012.

All taxpayers earning under $80,000 would see a tax cut of about 10 per cent when all the breaks were included, Duncan said.

About 2.3 million families and individuals would be eligible for an enhanced property tax credit of up to $1,025 for seniors and up to $900 for non-seniors, budget documents say. Maximum payments would go to families with net incomes of $25,000 or less and individuals with net incomes of $20,000.

Taken together, the measures mean a single parent with one child with a net income of $25,000 would be $1,115 better off next year and $570 better off in 2012, when the transitional sales tax benefit is phased out.

Anti-poverty activists welcomed the tax measures, particularly the sales tax credit, because it would go equally to singles and families with children and would not be clawed back from those on welfare. “This might be the beginning of the kind of welfare reform we’re looking for,” said Sarah Blackstock of the Income Security Advocacy Centre.

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