July 15, 2015
The Green Party is deeply concerned about the widening income gap, and the steadily increasing numbers of people trapped in the low-wage economy – workers, especially our young, who are struggling to survive with part-time, non-standard precarious employment. In the last year, part-time jobs accounted for 80% of net job creation. The bottom 40% of those employed has been losing ground since the early 1980s. And in the last 10 years, this bottom 40% has taken home on average about 12% of all income.
The Green Party advocates both root-and-branch tax reform and federal-provincial overhaul of our tax and benefit systems to create, among other things, a Guaranteed Liveable Income.
This concept is gaining more support as an effective measure to address poverty with the Canadian Medical Association passing a motion in support. More details at Basic Income: Just What the Doctor Ordered.
If we are genuinely committed as a nation to the goal of eliminating poverty, then the time is overdue for a truly innovative initiative – a Guaranteed Liveable Income (GLI). The Green Party’s GLI is a version of the so-called guaranteed annual income (also known as a negative income tax) that has been proposed for many years. It is an idea whose time has come. The principle is to establish an income floor below which no Canadian could fall, but with incentives for recipients to continue working and to earn more.
The GLI would replace federal transfers for social assistance (welfare), disability supports, the Old Age Supplement (OAS) and the Guaranteed Income Supplement (GIS) for the elderly, the Canadian Child Tax Benefit (CCTB) and National Child Benefit Supplement (NCB) for parents with children, and the Working Income Tax Benefit for the poor – all of which are already very GLI-like. (In this regard, the recent proposal of the Liberal Party of Canada to combine the CCTB and NCB, and eliminate the Harper Conservatives’ regressive child care benefit (UCCB), could be considered as a step towards a GLI program). The GLI would not impact Employment Insurance (EI), the Canada Pension Plan (CPP), child care subsidies, social housing drug benefits or dental care.
Once started, the biggest challenge in implementing a GLI will be jurisdictional: to get all levels of government to work together on this initiative. In particular, provincial governments would have to use their authority in some areas of income support to collapse programs or to integrate them into a single program. Total federal-provincial spending on income support in Canada reached $185 billion in 2013, equal to 1/10th of our Gross Domestic Product (GDP).To ensure political, multi-jurisdictional coherence, GLI will be an early agenda item for the Council of Canadian Governments. The Greens have called for the creation of the Council to bring federal, provincial-territorial, municipal and local governments and First Nations, Metis and Inuit people around the table to set national goals.
There is an enormous and persuasive amount of research which demonstrates that the multiplicity of income support programs – overlapping, confusing, and riddled with perverse incentives – is a huge problem. The basic idea of the GLI would be to replace separate federal and provincial programs with a single, universal, unconditional cash benefit delivered through the tax system. Establishing the base amount would depend on the measure of poverty used. The Green Party recommends using the OECD’s Low Income Measure (LIM) that has been adopted by Ontario. (Note that about 1/3 of Canadians have a yearly income lower than $20,000.) As money is earned above the minimum GLI level, it would be taxed back gradually. Benefits like free dental care or prescription drugs for low-income Canadians would continue.
The simplest way to begin the transition to a GLI and to put more income into the hands of the poorest Canadians, would be for the federal government to make all tax credits refundable (like the WITB, CCTB and GST). This would impact the personal credit, the spousal credit, the caregiver credit, as well as some deductions like the child care expenses deduction (CCED) which would be converted to a credit. In this connection, it should be noted that there has been some useful but limited federal- provincial coordination in select areas in recent years, such as the consolidation of the hodge-podge of tax credits – sales, property, energy – into a more effective monthly payment delivered quarterly through Ontario’s Trillium Benefit and Québec’s Solidarity Tax Credit. British Columbia has similarly consolidated its Climate Action Tax Credit with the federal GST credit and provincial HST credit. But so much more action is needed.
The introduction of a GLI payment would provide a regular minimum payment to every eligible Canadian adult and child. The payment would not be “clawed back” by any level of government. The GLI would be designed to be reduced gradually as a recipient earned additional income, in such a way as to be phased out completely once an upper threshold of income earned, say, $60,000 was achieved. The overall cost of the program would depend on the rate of reduction as the recipient’s employment income increased to the upper threshold.