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Do seniors need a tax rebate?

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THE opposition's unproductive filibuster of Budget 2013's increase in the PST has left many aspects of the budget undebated. One is its failure to provide for improvement in the Employment and Income Assistance Program (EIA -- a.k.a. "welfare") in the face of a well-documented pressing need.

In contrast, the budget eliminates the education property tax (EPT) for all seniors in 2015 -- a measure that has very little basis and 21/2 times the price tag.

In elaborating this perverse contrast, it should be noted this government has helped improve the lives of EIA recipients. It abolished the mean-spirited "snitch line" initiated by the former government. It repealed the clawback of the federal child tax credit. Budget 2013 extended a $20 increase in RentAid to some EIA recipients.

Nevertheless, there is widespread recognition that EIA remains a program that maintains people in most cases deeply below the poverty line. The Canadian Council on Welfare in 2011 reported that Manitoba's general assistance allowances for the single unemployed were among the worst in the country. EIA is not indexed, and there have been only miniscule increases in the basic rate since 2000. A report by the provincial ombudsman in 2010 hinted at the inadequacy of rates in calling for a comprehensive and transparent review.

For example, the EIA website indicates a single parent with one school-age child might receive $1,169 monthly. Two adults, considered employable, with three school-age children, might receive $2,230 a month. The major shortfall is in the rental allowance, which, together with the basic allowance, forms the two components of the formula for calculating an applicant's total. The rental allowance for a single parent is a maximum of $430. The median market rent (MMR) for a one-bedroom apartment in Winnipeg currently is $718. Two parents with three school-age children would qualify for $471. The Winnipeg MMR for three bedrooms was $1,100 in 2011. In each example, the recipient could be paying between 43 and 61 per cent of their total income just on rent.

Make Poverty History Manitoba recommends the EIA rental allowance be raised to an indexed 75 per cent of MMRs. This would restore the allowance only to the 1992 rent/rental allowance ratio, but it is an obvious step in the right direction. The cost of this program would have been $18 million in 2013.

The case for rebates of the total EPT for all seniors is weak by comparison. Part of the case is seniors receive no benefits from the public education system, but surely we depend for our continued well-being on the supply of literate citizen-workers produced by the system? Another is that seniors are poor. Indeed 80 per cent of seniors living alone have annual incomes of less than $40,000, but one-person households are only about one-third of the total senior population. An estimated two-thirds of all seniors receive income from sources other than public pensions, including investment income.

Finally, it can be argued that basing this policy on age as opposed to need will tend to benefit those most who least need it. Consider three possible groups. The first group will benefit, but doesn't need the rebate. It currently pays the highest EPT per household by virtue of being the most affluent in homes with the greatest assessed value. This group will attract the lion's share of the estimated $50-million giveaway.

A second group with an annual household income of less than $40,000 already qualifies for up to an extra $400 education property tax credit (EPTC) above the $700 credit accorded to all Manitoba households, for a total of $1,100. For this group, the EPTC will defray most, sometimes all, of their EPT. A total tax rebate will yield little or no immediate additional benefit for them. Also not benefiting are the 30 per cent of seniors who are renters.

The third group will benefit from the rebate and need it. These are seniors on modest incomes but either have homes assessed at high value, and/or they reside within a school division with a high mill rate. This would likely be by far the smallest of the three groups. Could there be other ways to assist this group -- a provincially sponsored reverse-mortgage plan competing with the private sector's high-cost plans, for instance?

One explanation for this puzzling contradiction is the currently prevailing, mindless anti-tax ideology that vetoes any and all program expenditure increases (such as improvements to EIA), while applauding any or all forgone revenues (the senior EPT rebate) regardless of the justification or lack thereof.

The resulting tax cuts have also greatly intensified the trading of one need against another. In the case of the seniors EPT rebate, the education system will not be short-changed, but something else will. Among the something elses is the dire need of recipients of the EIA program.


Pete Hudson is a senior citizen, a senior scholar at the faculty of social work, University of Manitoba and a research associate of the Canadian Centre for Policy Alternatives, Manitoba.

Republished from the Winnipeg Free Press print edition October 17, 2013 A15

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