Since its announcement, the 2024 Federal Budget has continued to generate much conversation, speculation, and expectation. Now that the dust has settled, let’s look at what the Budget offers and misses from an income security and social safety net lens.
The Canada Disability Benefit Sorely Disappoints:
The much-anticipated Canadian Disability Benefit (CDB) has dominated the conversation since its announcement, and rightly so. Despite the promise to reduce poverty and bridge the gap between the poverty line and the provincial disability benefits, members of disability communities and advocates across Canada were shocked to find how glaringly short the announced Benefit fell compared to the implied promise of a robust benefit.
The proposed funding of $6.1 billion over six years, which amounts to a maximum of $200 per month starting from July 2025 for a projected 600,000 recipients, will hardly reduce poverty or contribute to the Budget’s promise to “ensure a more fair chance for future generations of persons with disabilities”. The use of the Disability Tax Credit (DTC) as a gateway also raises alarm, as this decision will exclude hundreds of thousands of most vulnerable, low-income people with disabilities. While the proposed additional investment of $243 million will help to address the prohibitive cost of filling out the medical forms required to apply for the DTC, other factors including its restrictive definition of disability, non-refundable tax credit status, and burdensome Canada Revenue Agency eligibility process make the CDB inaccessible to a wide variety of people who need it.
In response to this Budget announcement, ISAC submitted a letter endorsed by over 50 community legal clinics across the province to Minister Freeland and Minister Khera urging them to increase the maximum monthly amount for eligible recipients and not to use the DTC as the sole gateway for accessing the CDB. We will be closely watching the next steps and holding the government accountable to its original promise.
Other Investment in Disability Support:
The Budget also commits to make an investment of $5 million over five years, starting from 2024-25 that allows for expansion of the types of medical expenses people with disabilities can deduct from their income taxes and claim from the CRA under the Disability Supports Deduction. The new provisions include expenses for service animals; assistive computer input devices, such as keyboards, braille display, digital pens; speech recognition devices, and ergonomic work chairs and bed positioning devices. However, the Deduction is based on one’s ability to incur expenses on assistive devices as well as to pay income tax, which means that those who do not pay income tax or have the means to pay for disability-related supports up front will not be able to access this new tax benefit.
Rollout of New National Pharmacare and Dental Care Plans:
The 2024 Budget launched the National Pharmacare Program with an investment of $1.5 billion over five years. The rollout in the first phase proposes to start with coverage of contraception and diabetes medication such as insulin. While questions remain on the eventual coverage of the program and the provincial and territorial buy-ins, it is a first important step in getting a publicly funded, universal pharmacare program off the ground in Canada, which remains the only country in the world with public health care but no universal coverage for prescription drugs.
The Budget further rolls out the Canadian Dental Care Plan (CDCP), expanding its coverage for uninsured seniors, persons with disabilities with DTC certificates, and children under 18, by the end of 2024. As we point out in our recently published benefit backgrounder, the CDCP needs to address concerns about access in general, restrictive eligibility criteria, interaction with provincial benefits, and access to appeal processes for the plan to have its intended impact on low-income Canadians.
Increased Capital Gains Tax on Corporations and Canada’s Wealthiest to Address Structural Inequalities:
We are glad to see the 2024 Budget’s move towards a fair and progressive tax system by increasing capital gains taxes on the wealthiest Canadians and financial corporations. This is an astute step in the face of Canada’s overall slide towards a more regressive tax system over the last couple of decades. In our 2023 submission to the Standing Committee on Finance, we pointed out the exorbitant after-tax corporate profits in the face of record-high inflation that impose the heaviest burden on Canadians with the lowest income.
The Budget proposes to increase the inclusion rate on capital gains taxes (the taxable share of the profit made on the sale of asset) to 66.67 per cent from 50 per cent for individuals with gains of more than $250,000. The tax rate for profit made on the sale of an asset below $250,000 remains the same. Corporations will have to pay the tax from the first dollar of capital gains, meaning that there is no threshold for exemption. This will result in $19.4 billion in revenue over the next five years with financial sector actors such as banks, mutual funds, captive financial institutions and moneylenders, being the most affected.
The capital gains tax will also create a new source of revenue for provinces and territories whose provincial tax regime definitions mirror the federal definition of taxable income. Because of the way Ontario’s capital gains tax system works, it is likely that the province will also see increased tax revenue from this change. Federal Budget 2024 suggests that provinces and territories could see additional tax revenues as high as $11 billion as a result of this change. The Budget also suggests that this type of increased revenue “can be used to lift up every generation by making transformative investments”. With Ontario’s social assistance rates in desperate need of increase, we call on the Ontario government to invest new tax revenue from provincial capital gains into direct income transfers to people receiving social assistance. This will positively transform the lives of hundreds of thousands of Ontarians and their families.
No Movement on EI Reform or Other Needed Reforms for Workers:
The recent Canadian Income Survey, 2022 reports that 1.1 million Employment Insurance (EI) recipients lost their benefit from 2021 to 2022, while the median EI income for recipients decreased by a little over 40 per cent (from $10,100 in 2021 to $5,900 in 2022) as pandemic-related changes to insurable hours expired and the number of insurable hours needed to qualify returned to pre-pandemic levels. If Canadians were depending on the government’s promise to modernize EI and stop the alarming trends of reduced access to a program most workers pay into, the 2024 Budget provided no hope.
While the Budget provides $2.9 billion over five years from 2024 for an IT upgrade of EI and Old Age Security programs to deliver the benefits more quickly, it ignores much-needed fundamental changes related to setting a higher minimum benefit floor, eliminating unfair disqualification rules and expanding access to migrant workers and those misclassified as independent contractors.
On the positive side, we are pleased to see the government has moved ahead with one of our key budget recommendations and has begun to move on its promise to enact an EI Board of Appeal (BoA). The recent announcement and launch of the BoA Governor in Council appointees’ selection process is a positive first step in establishing the tripartite first-level appeal system would improve fairness, efficiency, and outcomes for EI claimants. Though the budget does not reflect any investment in operation of the board, we hope to see the new appeal system up and running at the earliest.
Budget 2024 is also quiet on the promise of an inclusive regularization program that allows all undocumented people to apply for permanent resident status, without restrictions by industry of work or geography or a two-step immigration process, which only allows access to temporary work permits. In April, ISAC joined dozens of other organizations from across the country and sent a letter to PM Trudeau and Minister Miller advocating for a broad regularization program, which will help protect precarious and undocumented workers against exploitation, discrimination, and poverty. Though conversations are ongoing, movement towards action has been slow.
The Budget’s proposal of a Sectoral Table on the Care Economy and launch of a National Caregiving Strategy generates some optimism. We hope that these steps justly reflect the contributions of migrant care workers and create suitable avenues to apply for permanent resident status without strict criteria in educational accreditation and language test scores.
Along with billions of dollars of investment in artificial intelligence in this Budget, it is important that the government does not forget low-income workers in Canada, who keep the wheels of the economy turning. The Budget seems to have missed that memo.
Investing in Children:
The 2024 Budget introduces a new National School Food Program with an investment of $1 billion over five years that aims to provide meals to 400,000 more children every year. It is a welcome step in expanding a safety net that has the potential to improve nutrition and education for children who live in poverty. Unfortunately, the Budget introduces no measure to increase the Canada Child Benefit (CCB) benefit amount or income thresholds, which food security advocates have pointed out, has a direct and measurable impact on reducing child food insecurity in the country. Lack of investment in the CCB could not have come at a worse time, as child food insecurity has hit a record high in recent years.
A welcome measure in Budget 2024 for children in low-income families is the introduction of the automatic enrolment in the Canada Learning Bond (CLB) for eligible children whose families do not open a Registered Education Savings Plan (RESP). This means that the government will automatically open a RESP account for an eligible child born in 2024 and after, and when they turn four, contribute up to $2,000 in CLB payments auto-deposited in the account gradually over the years, to be used for post-secondary education.
Funding for Immigration and Refugee Legal Aid Services:
The government has continued it funding of an annual $43.50 million to the Department of Justice for immigration and refugee legal aid services, provided in partnership with provinces and territories. The Budget proposes to provide $273.7 million over five years, starting in 2024-25, an important support for asylum seekers who are unable to pay for legal services.
One-Time Tax Credits Not Renewed:
The 2024 Budget also marks the end of one-time tax credits the government had provided over the last couple of years. These include the CRA-administered one-time top-up to the Canada Housing Benefit in 2022, and the increased GST credit, dubbed the “Grocery Rebate” in 2023. While the amount provided in these credits were low, they were a welcome recognition from the Federal Government on the impact of the cost of living crisis. The food security and housing crises remain rampant, and the discontinuation of these credits means less money in the pockets of low-income Canadians.
Same Concerns Remain on Infrastructure Gaps in Indigenous Communities, Permanent Program Funding, and Stalled Movement on Enacting the Calls to Justice:
Budget 2024 includes more funding for Indigenous programming and initiatives compared to last year, with key investments in Indigenous healthcare, housing and infrastructure, justice and safety, and post-secondary education, though funding is comparatively lower when looking at previous years’ budgets. We share the concerns issued by the Assembly of First Nations regarding the need to close the $350 billion infrastructure gap.
Among other important points included in their critical and thorough budget analysis, Hayden King and Riley Yesno of the Yellowhead Institute note: “Finally, it is important to note that most of this funding is allocated to departments, agencies, or organizations that aim to support Indigenous communities and not Indigenous communities themselves, which actually receive less than ten percent of this spending.”
Indigenous communities across Canada have repeatedly stated their needs, both during and outside of budget time. The federal government must do more to honour and follow through on these specific requests, as well as their own existing commitments to Indigenous communities and community members.