Guaranteed Basic Income in Canada: Taxpayers Beware

A nationwide initiative that would provide Canadians with a base guaranteed income is under consideration. It’s a move with polarizing opinions, with many citing an increased burden upon taxpayers to fund the program.

With a pilot project already underway in Ontario, the Parliamentary Budget Officer (PBO) released a report outlining the financial impact of introducing a nationwide program. The program proposes Canadians are never forced to live on an income that isn’t sustainable, regardless of their employment status. The estimated cost to taxpayers is $43 Billion per year. However, the program itself would come at a cost of $76 to $79.5 Billion, as it would replace other support programs already offered to some low-income Canadians that are already accounted for in the budget.

The PBO estimates that the Guaranteed Basic Income program would benefit 7.5 million low-income Canadians and would model Ontario’s pilot program. Currently, the maximum amount for participants in Ontario has been set at $16,989 for singles and $24,027 for couples. Disabled Canadians receive an additional $500 in support. The amount received is reduced when income is acquired from other sources, like employment. These numbers were established taking low-income tax credits and benefits into consideration

Ontario’s Basic Income program requires that participants be between the ages of 18 and 64. Seniors are not eligible due to the availability of other income supplement and benefit programs. Employment Insurance and income from CPP can still be collected, but reduce the guaranteed basic income dollar-for-dollar. The test group of eligible Ontarians is being monitored to determine if a universal income supplement improves quality of life, food security, and improved physical and mental health.

It’s a controversial consideration, particularly in light of the fact that Finland just pulled the plug on their universal income experiment. With fewer strings attached than in Ontario’s model, the nation provided 560 Euros to 2,000 unemployed individuals for more than a year. Since revealing that their experiment would end in 2018, they’ve put legislation in place to revoke other benefits and income supplementation from unemployed individuals who are unable to prove that they’re actively seeking job opportunities.

Additional educational resources:

Looking to gain further understanding about tax provisions outlined in the 2018 federal budget? The Spring CE Summits are focused on post-budget action strategies for tax and financial advisors. Evelyn Jacks will be joined by cross-order tax expert Dean Smith and several regional business leaders in the tax and financial services in a peer-to-peer educational experience in these comprehensive workshops. The early registration deadline is May 15; for the best rates, reserve your seat today!

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