Enhancing the Working Income Tax Benefit
Ken Battle and Sherri Torjman, December 2012

This paper is the text of a presentation to the All-Party Anti-Poverty Caucus.

The Working Income Tax Benefit (WITB) was introduced in the 2007 federal Budget.  WITB pays benefits to single persons and families as well as an additional amount to workers with disabilities.  Ottawa allows the provinces and territories to vary WITB’s parameters to better mesh with their income security systems and policy priorities.  So far Quebec, BC, Alberta and Nunavut have chosen to redesign WITB for their workforce.

WITB launched as a lean program that paid a maximum benefit of just $500 for single persons and $1,000 for families, and was so limited in reach that it excluded many of the country’s working poor.  While the government boosted WITB’s benefits and reach considerably in 2009, it is still in need of considerable growth.  The Working Income Tax Benefit sits in 2012 at a modest maximum $970 for a single worker per year ($1,762 for a family) and cuts out at a low net income of $17,478 ($26,952 for a family).

Caledon endorses three criteria for expanding WITB in future.  The federal government should:

  • increase maximum benefits
  • widen eligibility or program ‘reach’ to include all households below the low income cut-off
  • expand the WITB to reach all households earning minimum wage.

The paper presents several options for reform on the basis of these criteria.  The first group of proposals looks at substantial benefit boosts that would increase the maximum payment by 50 percent and 100 percent (what we call the 1.5 and 2.0 options).  The second cluster of proposals maintains the current level of benefit but changes the current design (by increasing the net income threshold) in order to include more recipients and extend maximum benefits.  The third set of proposals boosts maximum benefits and extends WITB’s reach – while containing increased costs by means of changes to the design of the program (i.e., the rate at which benefits are reduced above the threshold for maximum payment).

Cost is a major consideration.  The paper suggests that Ottawa should make incremental increases over the years to grow WITB according to these three criteria, with the aid of ongoing evaluation and research.  Major changes can be introduced over time in order to reach desired objectives as was done with the development of the Canada Child Tax Benefit.

ISBN - 1-55382-571-1

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