Kathleen Lahey
Mar. 5, 2010

The big picture: Women are half the population in Canada and nearly half the official labour force – but still do 62% of all unpaid work, and receive only 40% of after-tax incomes.

This Budget: The government claims that it is providing one last $19 billion ‘stimulus’ package this year, shorn of new tax cuts or spending items. This is highly misleading. New corporate tax cuts and continued huge PIT and GST cuts bring the total to $41.9 billion for 2010/11.

Gender gaps This $41.9 billion is being delivered in forms that will benefit far more in Budget 2010: men than women, widen gender gaps even further, and continue to drive up poverty rates among women and single parents:

2010-2011: Amount: Women’s share:
Infrastructure spending $ 9.6 bill. 7% to 22%
Corporate tax cuts $10.1 bill. 10% to 37%
GST tax cuts $10.0 bill. 38%
Personal income tax cuts $ 7.4 bill. 40%
EI enhancements $ 4.8 bill. 36%
Single-parent UCCB tax cut $ 0.005 bill. 81% (max $168/C)

Infrastructure spending $9.6 billion, 2010-2011
($8 billion, 2009-2010)

• For 2010-2011, the ‘base’ infrastructure fund is $7.7 billion, which will continue to be allocated to road, municipal improvement, and building infrastructure:

– only 7% of construction, trade, transportation workers are women
– only 21-22% in engineering, manufacturing, and primary industries/women1

• For 2010-2011, an additional $1.9 billion is being added for post-secondary infrastructure, consisting of both construction and enhancement of selected areas of research and technology innovation:

– these construction funds will impact women in the same 7% to 22% range
– there are relatively few women in the research and technology areas targeted for the remainder of this funding: only 21% to 23% are women2

• No gender equity requirements have been included in any of these spending programs

• Tying provincial and municipal construction project criteria to federal funding forces provinces/local governments to match funds on the same terms (provincial shares: 61%) and continues to block child care projects desperately needed across the country

• Will women get another 2 shelters this year? (Cf 3 animal shelter projects in 2009)
Corporate income tax cuts $10.1 billion, 2010-2011
($6.3 billion, 2000-2010)
($44.8 billion, 2010-2014)

• These tax cuts were announced beginning in 2006, were accelerated in 2008, and will be fully implemented in 2012 – they reduce the general rate from 22.12% to 15% by 2014

• By 2014, total federal revenues produced by corporate income taxes will have been permanently cut by a third of former corporate tax revenue

• The $10.1 billion cut in 2010-2011 reflects the 1% cut that came into effect in 2009 plus the new 1.5% cut coming into effect in 2010 (but buried in fine print in Budget 2010)

• These cuts permanently depress Canada’s annual revenue, and form one basis for the argument that Canada cannot fund programs like child care or women’s services

• The federal government has been pressuring provinces to make similar large rate cuts

• Once the combined federal-provincial corporate income tax rate falls below 35%, the US government will begin collecting a share of Canada’s foregone CIT revenues

• The government itself has admitted that corporate income tax cuts only weakly promote economic growth (Budget 2010, table A1.1)

• Men will be the largest beneficiaries of these cuts, because almost all CEOs, directors, and controlling shareholders are men, and 63% of corporate shares are owned by men

• One of the tax benefits of receiving corporate dividends is that the first $50,000 is tax exempt ($34,000 if issued by small business corporations) – compare this with those who live on subsistence incomes of $10,320 or less – such low incomes are PIT-free, but will still bear total taxes of 17.175% from the GST/HST-PST, EI, and CPP GST tax rate reductions (2%) $10 billion (annual) ($34.8 billion 2007-2011)

• The GST and PST/HST are highly regressive, giving the biggest benefits to those with the highest incomes regardless of whether they save or spend

• The GST tax credits refunds only a small part of the GST that is paid by those with low incomes (the credit covers the tax on approx. $4,750 of spending)

• GST tax savings per year on spending, for taxpayers in —

Bottom income quintile: $280
Top income quintile: $1,244

• The 2% rate cut has contributed substantially to the sharp reduction in federal revenues, thus impairing federal capacity to go ahead with adequate affordable child care or expand EI to give benefits to more marginalized members of the labour force

• As the federal government has placed pressure on provinces to induce them to ‘harmonize’ their PSTs with the federal GST, provincial tax bases are being expanded to include previously non-taxed services, resulting in further increases that affect lowincome taxpayers the most negatively (usually without offsetting low-income credits)

• 62% of these federal GST tax cuts go to men, 38% go to women Personal income tax cuts $7.35 billion, 2010-2011
($18.4 billion, 2008-2010)

• Lowest income tax rate reduced from 16% to 15%: ($5.5 bill)

– At least 40.4% of women receive no benefit from any of these cuts because their incomes are so low they already pay no income taxes

– These cuts to to middle and high income taxpayers too – to all taxpayers
– Women’s average incomes are too low to use the whole benefit of this cut
– The average benefit to men of this cut is $196 – to women, $171
– Men receive 57% of this cut, women, 43%

• $220 increase in the personal exemption: ($0.55 bill.)

– At least 40% of women will receive nothing from this cut (no tax liability)
– This cut is also available to all taxpayers, no matter how high their income
– 54% of this cut goes to male taxpayers; maximum cut/year = $333

• $1,894 increase in the lowest income bracket (15%): ($1.0 bill.)

– Only 14% of all women taxpayers can get this tax cut (and 30% of all men)
– 67% will go to male taxpayers; maximum cut/year = $1324

• $3,788 increase in the second income bracket (22%): ($0.3 bill.)

– Only 6% of all women taxpayers will enjoy this tax cut (and 14% of all men)
– 70% of this cut goes to male taxpayers; maximum cut/year = $1515
Employment insurance $4.8 billion, 2010-2011
($2 billion in 2009-2010)

• For 2010-2011, $2.6 billion of this total is being allocated to further extensions of EI for those with ‘standard’ eligibility for regular benefits

• For 2010-2011, an additional $2.2 billion is being allocated to labour market adjustment projects in regions facing special challenges

• Regardless of program allocations, those working less than 35 hours per week during qualifying periods have marginal eligibility

• Because 70% of all part-time workers are women, and because the hourly wages of women in all employment categories are lower than men’s, only about 36% of those receiving regular EI benefits are women

• The EI extensions offered in 2009 and 2010 (announced in Budget 2009) are only available to workers already qualifying for EI; they do not bring other workers into EI

• The new women workers who might qualify under EI enhancements are those who stayed at home for long periods of time with their children – not women in nonqualifying paid work who have only taken time out for maternity leave, and who are disproportionately disadvantaged in obtaining those EI benefits due to the current eligibility criteria

• There is growing support for the 360 hour EI qualification test

• Postponement of increases in employee contribution rates and reduced employer contribution rates that have never occurred are not real tax benefits Home buyer tax credits $200 million in 2009-2010

• These credits will only be available to those who can afford to purchase a home

• Because these credits are not refundable, even low-income taxpayers who are able to purchase a home cannot use them, because they will have no tax liability against which to offset them

• On average, women will thus receive far fewer credits under this program, because their average incomes are much lower than men’s:
– women’s average incomes: $27,000
– men’s average incomes: $45,0006

• Most women’s incomes fall into the three lowest income quintiles, all of which are net dis-savers – they end every year with net debt7

• For the same reasons, low income taxpayers – predominantly women – will not have RRSP savings that they are allowed to roll into home purchases on a tax-free bases Working income tax benefit $580 million per year

• The current Working Income Tax Benefit (WITB) is $522/year for a single individual and $1044 for a single parent; Budget 2009 enhanced these benefits to the current levels:

– Single individuals: to $925 credit per year, phased out at income of $16,700
– Single parents: to $1,680 credit per year, phased out at income of $25,700

• Only one spouse/partner or the other can claim this credit

• Women who cannot enter paid work without affordable reliable child care will not be able to take advantage of this increased credit Canada child tax benefit $230 million/year

• The brackets measuring the phase-out of the Canada Child Tax Credit and the National Child Benefit Supplement are each being increased by the same $1,894 that is added to the 15% income bracket

• The result of this change is to increase at the top end of the brackets used to phase-out these two low-income benefits, adding a bit more to the after-tax income of the parents currently receiving the CCTB or NCB Supp at the highest end of that income scale

• No new money is going to parents at the low end of the income brackets used to measure qualification for these benefits, however UCCB/Single parent calculation $5 million/year

• The ‘Universal Child Care Benefit’ was introduced in 2006 to replace the $5 bill. national child care program established in 2005 (UCCB cost/year = $2.1 billion)

• The government claimed that it ‘will support child care choices by families’8

• The UCCB is taxable, and this change will reduce the single parents’ tax on it by $168/yr

• Even the full UCCB ($1200/yr) is far too little to enable single parents to ‘choose’ to stay at home to care for their children vs. pay for childcare so they can earn income Joint tax measures Ongoing; expanded in 2006

• All joint fiscal measures create disincentives to women’s paid work

• Joint low-income refundable tax credits impose tax penalties on low-income women:

• There are a few tax benefits that are designed to provide refundable credits to those whose incomes are too low to be able to claim ordinary tax benefits (40.4% of women) GST tax credit Canada Child Tax Benefit
Working Income Tax Benefit [$580 mill/yr; $522 single; $1044 couple]

• However, these refundable credits are all subject to couple-based LICOs that artificially bar many low-income women from receiving these refundable credits

Single taxpayer: $13,500 [2009: $16,700]
Coupled taxpayer: $21,500 [2009: $25,700]

• These couple LICOs raise the ‘welfare wall’ for low-income women in relationships

• They impose tax penalties on relationships without regard for the economic realities of those relationships

• Open-ended joint tax measures undermine women’s economic security:

• Unlike joint provisions for low-income refundable tax credits, many joint tax benefits discourage women with mid/high income spouses/partners from earning income

• Most joint tax benefits reward higher income spouses for supporting their spouse/partner

– without any upper limits on eligibility, no matter how high the income (e.g., dependent spouse credit and transferrable spousal credits; family limits on child care deductions; spousal RRSPs; caregiver credits; Universal Child Care Benefit; pension income splitting; TFSA investment income splitting)

• Pension income splitting (2006 onward; $0.6 bill/year): For couples only: The higher the income of the supporting spouse, the higher the tax benefit from pension splitting:

Supporting spouse/ $26,800 Tax benefit: —
partner income: $31,800 $500
$41,800 $700
$72,000 $2,975
$100,000 $8,125
$140,000 $11,216

• Creates fiscal disincentives for lower-income spouse to work after higher-income spouse/partner retires, to have own-source pension income, or a spousal RRSP Tax-free savings accounts: $0.5 billion (2009; expanding)

• $5,000 can be contributed to tax-exempt accumulation accounts each year for ultimate tax-exempt withdrawal; $10,000 per couple; $5,000 per adult child

• Only the top quintile of households have enough savings to fully fund TFSAs fully9

• Spousal TFSAs are not required to remain the property of the non-earning owner

1. Statistics Canada, ‘Work Chapter Updates,’ Women in Canada (Ottawa: 2005); online:
http://www.statcan.ca/english/freepub/89F0133XIE/89F0133XIE2006000.htm.
2. Statistics Canada, ‘University Enrolment, 2007/2009,’ The Daily (July 13, 2009);
online:
http://www.statcan.gc.ca/daily-quotidien/090713/tdq-9-713-eng.htm.
3. Based on data in CRA, Income Statistics 2007.
4. Based on data in CRA, Income Statistics 2007.
5. Based on data in CRA, Income Statistics 2007.
6. Canada Revenue Agency, Income Statistics 2007 [2005 tax year] (Ottawa: 2007) table
6,
at 15-16; online: http://www.cra-arc.gc.ca/gncy/stts/gb05/pst/fnl/pdf/table6-eng.pdf.
7. Sauve, Vanier Insitute for the Family, 2005.
8. Hon. Flaherty, Minister of Finance, The Budget Speech 2006 (May 2, 2006); online:
http://www.fin.gc.ca/budget06/speech/speech-eng.asp.
9. Sauve, Vanier Insitute for the Family, 2005