RELIEVING POVERTY: N.S. should bring in new tax credit
I was pleased to see the recent discussion in The Chronicle Herald of the concept of either a guaranteed annual income or a negative income tax. Herald Editor-in-Chief Bob Howse, Senator Hugh Segal and former NDP leader Ed Broadbent all brought important points to the table, as did the people who commented on those stories. Even the uglier comments added value to the debate, since they highlighted just how difficult it would be to create the ideal circumstances to achieve the transformational change that a fully implemented negative income tax would involve.
SEE ALSO: RELIEVING POVERTY: What we really need is guaranteed income security
Just think of telling an EI recipient, perhaps even a seasonal worker, that he or she would no longer qualify for EI because there is no longer going to BE an EI program. Or a single mother struggling on welfare that her cheques will be ending because there will be no money to cover the cheques and no social worker to decide if she qualifies. Or a father, days away from the birth of the family’s first child, that the paternity leave he was planning on will no longer be available. I realize we would be promising them that another cheque would replace the one they would be losing, but someone would eventually ask, “Will it?” and trot out the inevitable examples where the “new” NIT does not deliver the same value as the old “insert your preferred benefit program here.”
Even if we could get all of the recipients on board, try this as an experiment in delivering a true NIT in Nova Scotia. Call your local union hall and explain that 10,000 to 20,000 federal or provincial employees are going to be fired because the programs they administer will no longer exist. Heck, try doing that for a just a few hundred.
These are, after all, the necessary systemic savings that give the negative income tax its internal logic. They simultaneously highlight the critical question of deciding how high the guaranteed income should be (by discussing what services and level of income we as a society consider to be “minimum” while also answering the equally tough question: “How do we pay for THAT?”
The discussion also highlights the three biggest problems with a negative income tax: the never-ending demand for more (more benefits, higher minimums, bigger guarantees); the directly related disincentive to work, which then results in a reduced collective ability to pay (through taxes) for the higher minimum benefit even as we demand it.
On that basis, I agree with Ed Broadbent. In pursuing an end to poverty and the achievement of a guaranteed minimum income level under which no Canadian would fall, the next logical step is to increase the Working Income Tax Benefit. That change is achievable without the large-scale and difficult to politically achieve trade-offs that a negative income tax would require. A Working Income Tax Benefit helps make work more attractive while simultaneously closing the income gap. It should also help close the gaps that Ottawa seems, right now anyway, most interested in closing — the presence of high unemployment in areas that seem to be simultaneously experiencing worker shortages.
I would go further, though. The province of Nova Scotia need not wait for the federal government to buy in before experimenting with this idea. The province can easily and unilaterally introduce some level of matching provincial WITB right now. Indeed, to the extent that payroll rebates are, notionally at least, available to all employers, we already have a provincial WITB. Let’s eliminate the “notionally” and create a purpose-designed Nova Scotia WITB.
As Mr. Broadbent points out, the greatest gap in income supports is for the working poor. A richer, more generous WITB addresses that.