Lisa PhilippsOsgoode Hall Law School

Presentation to ISAC, May 30, 2011

It can be if programs are well designed to:

Work for diverse recipients (gender, family status, immigration status)

Interact with other tax and non-tax supports and services

1. Fiscal cost2. Interaction with other income and

benefits3. Eligibility criteria4. Responsiveness to change in

circumstance5. Complexity/transparency6.

Administration/enforcement/adjudication

Tax delivered benefits are costly to current government budgets, relative to some alternatives (eg. raising minimum wage)

Will they be paid for by cutting other supports or services critical to low income persons?

Clawback of benefits should be gradual as wages rise

If non-cash supplemental benefits are withdrawn too quickly, recipients may end up worse off

Need for ongoing access to emergency funds

Immigration status – tax benefits currently impose more onerous requirements

Benefit unit – individual, couple or household◦ Any joint unit results in potential benefit loss when

low income people live together◦ Any joint unit therefore creates a risk of

dependency trap for some household members◦ What vision of the ideal family is at play?

Targeting – how is “income” defined?◦ Deduction of past business losses, rrsp

contributions…

Current tax benefits less responsive to changes in income (18 months+)

◦ reduces risk of overpayments◦ ‘bonus’ in year that income increases◦ but requires access to a more responsive back

stop ◦ what would replace OW or ODSP as the

emergency back stop?

Response to changes in family status◦ More timely than changes in income◦ But 90 day wait time after separation can be

onerous◦ New rules for “shared custody parents” impose

splitting of monthly benefit between parents Pro’s: likely to reduce disputes with CRA; smoother

income stream than 6-monthly alternation Con’s: reduction in benefits for separated parents

who were claiming full benefit; continued ambiguity about “shared custody”

Tax benefits interact with other provisions of a highly complex statute

Risk of accidental overclaiming Risk of not claiming or not appealing Cost of tax preparers Lower satisfaction due to non-transparency

(why are my benefits changing again? Are they correct?)

CRA and TCC have tax expertise, but not necessarily expertise in issues facing low income persons

Enforcement less intrusive in practice, but this can change ◦ Evidence of IRS audit practice in US◦ Auditor general targeting of CTTB enforcement◦ Broad enforcement powers in ITA◦ Does stigma resurface for less universal benefits?

TCC informal procedure appeals

◦ Less than $12,000 at issue◦ Agents are allowed◦ Relaxed evidentiary rules and procedure◦ Costs – unlikely but not impossible◦ Full appeal to FCA◦ Still less accessible geographically and

procedurally◦ Onus is on taxpayer to disprove Minister’s

assessment◦ Case law: not immune from troubling biases and

stereotypes