A step in the right direction: The new Canada Groceries and Essentials Benefit in context

On January 26, the federal government announced a series of new measures aimed at making groceries more affordable. The centrepiece of the plan is a new Canada Groceries and Essentials Benefit (CGEB).

The CGEB replaces the existing GST/HST credit, temporarily increasing its value for the next five years. The government frames the change as a food security measure intended “to support those most affected by the rising price of food.”

With food insecurity up sharply across Canada since the global pandemic – especially among several systemically disadvantaged groups – Maytree welcomes government action to address this crisis. The Institute for Research on Public Policy (IRPP) and its Affordability Action Council, of which Maytree is a member, developed the original vision and supporting research for a Groceries and Essentials Benefit, and many groups and individuals contributed to and tirelessly advocated for this change. Strengthening tax credits for low-income families is an efficient approach, and the new CGEB is a good start.

That said, the work is not done. Our early analysis of the new benefit suggests the maximum value is too low to meaningfully reduce food insecurity for a sustained period. Furthermore, when considered in the context of other recent tax changes, low-income families have not yet received their fair share of income support from the federal government.  

We urge greater action to build on this announcement with more ambitious, long-term reforms that match the scale of the problems faced by people with low income, including rising levels of food insecurity, homelessness, and poverty.

The CGEB is an efficient mechanism to address food insecurity

The CGEB, like the GST/HST credit, will be a refundable tax credit that is income-tested and paid in four installments over the year. The benefit amount depends on family size and the adjusted family net income (AFNI).

The CGEB is an especially good mechanism for delivering financial assistance because its design is targeted to people with low and modest incomes who face a higher likelihood of experiencing food insecurity. It’s also one of the only benefits available to all household types, meaning it can be accessed by single working-age adults – the group that receives the least government support and who experience the highest rate and depth of poverty in Canada. In fact, single people made up 81 per cent of all GST/HST credit recipients in 2024-25.

By building on the GST/HST credit, the nearly 12 million existing recipients will automatically benefit from the CGEB. However, using the tax system has a major drawback: Access requires filing taxes – a barrier that continues to shut out hundreds of thousands of otherwise eligible non-tax-filers. This means it is even more important that the federal government heed calls to improve and accelerate the new Automatic Federal Benefits initiative.

The maximum CGEB amount is too low

Since 2019, overall prices have risen by about 20 per cent, while food and shelter prices have increased by closer to 30 per cent. Despite the GST/HST credit being indexed to inflation, the gap between what the credit offered in benefits and what people need has grown substantially. The proposed CGEB would not fill this gap.

As shown in Table 1, the CGEB’s temporary top-ups begin to address today’s affordability challenges, but they are much more modest than what is needed to offset the rising costs of essentials for people with low income. The government promises a 75 per cent increase for 2026-27, dropping to just a 25 per cent increase for the following four years. Conversely, the IRRP’s original proposal for a Groceries and Essentials Benefit recommended more than tripling benefit maximums while lowering the phase-out threshold so that larger increases were concentrated among households in deep poverty.

Table 1: Changes to the maximum annual benefit amount by family type, CGEB versus IRPP proposal

Sources: Finance Canada’s CGEB Backgrounder and the 2023 IRPP proposal

After benefit levels spike in 2026-27, they will fall back to 25 per cent above current levels (plus inflation) for the next four years. Over this time, the government proposes to provide single adults – who again make up over 80 per cent of recipients – with a maximum increase of about $136 a year or less than $12 every month. This is far from what it would take to meaningfully address food insecurity or poverty in Canada.

Low-income households have not yet received their fair share of federal government support

So far, we have looked at the new CGEB proposal in isolation. However, the federal government has made several significant tax policy changes since March 2025 that have had uneven impacts across the income distribution (see Table 2).

Table 2: Average annual impact of recent tax changes by household income quintile

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Even with the methodological differences in the data, we can draw several broad conclusions:

• The lowest income households saw barely any benefit from the recent income tax cut, while the greatest gains went to households in the highest income quintile;
• The loss of the Canada Carbon Rebate made households in the lowest income quintile substantially worse off in all eight affected provinces, even after accounting for savings from the elimination of the Carbon Tax. Meanwhile, households in the highest income quintile gained the most; and
• On average, the new CGEB is not enough to return low-income families to where they were in March 2025, except perhaps in 2026-27 when the average low-income household in some provinces may be briefly better off.

Considering all the recent major tax changes as a group, low-income households are still underwater compared to a year ago, while high-income households have seen gains measured in thousands of dollars a year.

The government must build on the CGEB to reverse its regressive tax policy record.

Why are low-income benefits so often temporary?

The CGEB also continues a worrying pattern: Affordability initiatives for people with low income in Canada are very often temporary. While the recent middle class tax cut is a permanent change, the CGEB is expected to return to its current level (indexed to inflation) after 2030-31.

This comes on the heels of several time-limited benefits in recent years. In both 2020 and 2022, the GST/HST credit was temporarily increased, first as a pandemic relief measure and then as an inflation relief measure. The government also offered a one-time $500 payment to low-income renters in 2022-23, billed as a “one-time top-up to the Canada Housing Benefit.”

These benefits were allowed to sunset despite evidence that affordability had not improved for low-income families. Had they been made permanent, benefit levels today would be much closer to what advocates called for when proposing the Groceries and Essentials Benefit.

The temporary nature of these initiatives is a concerning pattern that should not continue. It conveys the message that decision-makers are not serious about addressing the long-term challenges faced by people with a low income.

Something to build on

Canada is one of the richest countries in the world. As a values-driven nation and would-be human rights champion, we cannot ignore when our neighbours are hungry, homeless, and prevented from living a life of basic human dignity.

The proposed CGBE is part of a larger package of reforms aimed at countering the rising price of groceries. These include:

• $500 million to help businesses address the costs of supply chain disruptions without passing those costs on to all people in Canada at the checkout line;
• A $150 million Food Security Fund for small and medium enterprises and the organizations that support them;
• Allowing producers an immediate tax write-off on investments in greenhouses as a way to encourage domestic food production;
• $20 million to food banks and other organizations to deliver more nutritious food to families in need;
• Introducing a National Food Security Strategy; and
• Unit price labelling and supports for the Competition Bureau in monitoring and enforcing competition in the market.

These are important additional steps that could bear long-term fruit, particularly if the government does more to promote competition and address monopolies in the food system.

However, it is only through greater investments in income supports that everyone in Canada will be able to put food on the table today. The CGEB is a good start, but it is not enough.