Federal Child Tax Benefit Axed – Will Affect Low and Middle Income Families

According to an article in the Vancouver Sun/Can West News

– As the federal government sends out the first $100 cheques under its new Universal Child Care Benefit program, it is also cutting a $20.75 young child supplement for hundreds of thousands of low- and middle-income families in a move one critic calls “a real sneaky one.”

– 769,000 families who received the supplement last year will no longer get it as of this month, is not including any explanation about the phase-out of the supplement with the three million Child Tax Benefit cheques.

– Ken Battle, of the Caledon Institute of Social Policy, calls the elimination of the young child supplement “sneaky.” He says he suspects the government is relying on the complexities of the programs to keep people from grasping that they won’t get as much as they think.

“The government didn’t come out and explain to people that yes, you are going to get a $1,200-a-year new benefit, but by the way, if you get the young child supplement — which is mainly for low- and middle-income people — you are going to lose $249,” from cuts to the Child Tax Benefit program. “I think it’s a case of what we usually call ‘stealth,’ where the technical design details of a social program aren’t widely understood and therefore people end up getting less than they think.”

– Families with young children who qualify for the new universal benefit program can no longer collect the young child supplement paid under the Canada Child Tax Benefit Program, leaving those affected with a net gain of less than $80 a month, not $100.

– July marks the start of a new program year, when each family’s benefit amounts are changed based on their previous year’s income tax filing, it may be difficult for some people to spot what has changed when they get their cheques in the next few days.

– Colleen Cameron, press secretary to Human Resources Minister Diane Finley, who has the lead responsibility for the program, says there was no attempt to mislead or sneak anything by the public.”It was part of our plan. It was listed on our website, I don’t think it was anything that we tried to sneak past in any backwards way,” she said.

– According to Battle, a couple with one wage earner would keep $987 of the $1,200 after tax; a two-earner couple would keep $935, and the single-parent family would keep just $826 because the $1,200 of extra taxable income pushes that parent into a higher tax bracket than either of the other two.

Even a single mother, living on welfare with an income too low to tax, would not escape some sort of clawback, he said. Her $1,200 per child payment would melt to $951, due to the loss of the young child supplement in the Child Tax Benefit program.

– Eliminating the young child supplement will save the government about $340 million this year and $400 million annually after it is completely eliminated next year.