According to a Fraser Institute study, the federal government is shifting the share of overall spending on child benefits from low-income families to middle- and upper-income families to an even greater degree than previously thought.
The study looks at the Canada Child Benefit (CCB) — a tax-free payment meant to target low- and middle-income families — and how its tax-free benefits affect the distribution of overall program spending.
It compares CCB’s expenditures adjusted for its tax-exempt status to CCB’s actual expenditures and to expenditures made under the two previous federal programs – the Universal Child Care Benefit ( UCCB) and the Canada Child Tax Benefit (CCTB) – which were not tax exempt. and were replaced by the CCB in 2019.
According to the study, the total value of the ACE in 2019 increased from approximately $24.9 billion to $32.5 billion when the benefit’s tax exemption is included.
But he found that, when comparing adjusted CCB expenditures to actual CCB expenditures for all eligible families, households with incomes below $10,000 saw no change in their share. overall expenditure distribution, while households with incomes ranging from $10,000 to $70,000 saw a reduction in their share of CCB expenditures, from 44.7% to 40.7%. Families with incomes over $70,000 experienced an increase in their share of total CCB expenditures, from 55% to 59%.
“The shift in overall ACE expenditures toward middle- and upper-income families when accounting for ACE’s tax-exempt status is even greater than previous analyzes concluded,” the report says. study.
He said differences in the share of benefits between families with different income levels are greater when comparing ACE’s adjusted expenditures – to account for its tax-exempt status – with the distribution of expenses under the PUGE and CCTB programs.
Families with incomes below $60,000 saw their share of total CCB expenditures decrease from 42.9% to 29.7%, while families with incomes between $60,000 and $180,000 saw their share of spending increase from 49.2% below the previous two years. programs at 66.8 percent. Families with income over $180,000 experienced a reduction in their share of total CCB expenditures from 7.9% to 3.5%.
“While the federal government often claims that child benefits are going to Canadian families who need them most, the change in overall spending tells a different story,” said Jason Clemens, executive vice president of the Fraser Institute, in a press release on 18 August.
“At a time when Ottawa is running deficits with no end in sight, CCB is yet another poorly targeted federal program.