Prices and incomes are rising, but often the thresholds for determining tax payable and tax credits don’t keep up
William Robson and Alexandre Laurin are chief executive and director of research, respectively, at the C.D. Howe Institute.
Many thresholds and amounts – such as those determining personal income tax rates, or goods and services tax or harmonized sales tax payable – can simply rise with the Consumer Price Index. Many do, such as federal income tax brackets, but as we discuss in a recent C.D. Howe InstituteA salient example, with housing prices front-of-mind for many Canadians, is the GST/HST New Housing Rebate.
The falling real value of these limits effectively raises the tax burden on working parents with children. Worse, if and when the federal government next raises them, likely by the same meagre increments of the past, they will likely proclaim tax relief for parents, even if the limits are still below the past real amounts.
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