Targeted Tax Relief

Changes to the tax system since the mid-1980s have placed a growing burden on Canadians least able to bear it – those with low and modest incomes.  The elimination of the federal income tax reduction and partial deindexation of the personal income tax system under the Mulroney government – measures which are still in effect today – have substantially increased income taxes and lowered the federal tax threshold.  Partial deindexation of the refundable GST credit means that only one group pays more GST each year – the poor.  Governments’ decision to more rapidly increase Canada Pension Plan contribution rates over the next seven years and to freeze the Year’s Basic Exemption will weight heaviest on workers with below-average earnings.  To deal with this problem, the Caledon Institute proposes that the federal and provincial governments together create a fully-indexed integrated tax credit system which will ease the burden on lower-income Canadians of federal and provincial income taxes, the GST, payroll taxes and provincial sales taxes.

ISBN – 1-895796-83-0