The Elimination of Poverty in Canada
Written by Sean Ross
November 12, 2014
I have come up with a radical policy that many people may oppose but once my statistics have been analyzed, I am sure that most people would agree that this is the best policy to end poverty in Canada.
Poverty is a social problem that affects every of our part of culture and society. It includes sustained low levels of income and a lack of access to services like education, markets, health care, lack of decision making ability, transportation, and communications. Furthermore, it is a "poverty of spirit," that allows members of that community to believe in and share despair, hopelessness, apathy, and timidity. Poverty, especially the factors that contribute to it, is a social problem, and its solution is social.
The first thing I would do is eliminate minimum wage. Although this sounds counterintuitive, you will see that it is not.
The first minimum wage laws were introduced in New Zealand in the late 1800's. 90% of countries have some sort of minimum wage law. Since 12% of Canadians are deemed poor, these minimum wage laws are clearly not working to end poverty.
Nearly 50% of Canadians work for small businesses, in fact 40% of Canadians work for companies that have fewer than 20 employees. These small businesses are impacted the most by minimum wage policies since they have the most difficulty with being able to afford the costs of said employees.
There are approximately 100,000 new small businesses created every year in Canada, but sadly about 100,000 small businesses also go bankrupt each year. Eliminating minimum wage would be a great way to help the success rates of these small businesses because most small business complain that their biggest expense are wages.
Many small companies would like to hire more employees but they do not do so because minimum wage is too high to make it viable for them.
Also, there are many people that are not worth the cost of minimum wage, for example, many parents are loathe to pay a thirteen year old babysitter $10 per hour but the law forces them to do so. Many parents would go out more often if they did not have to pay these high fees for a young person with little education and very little life experience. By going out more often, these parents would help stimulate the economy.
Also, mothers helpers, these are usually young tweens who look after the mothers kids while one of the parents does laundry and tends to the tasks of running the home. Many parents would be more willing to hire mothers helpers if they were not forced to pay these people minimum wage.
Also, there are many handicapped and mentally challenged individuals in our society who are unable to work at the same speed as a regular individual and are therefore unemployable at the cost of minimum wage.
Also, many barkeepers, waiters and waitresses have to be paid minimum wage, and this leaves many restaurants and bars understaffed. Imagine how many more servants restaurants would hire if they were not required to pay minimum wage. This would also make for more satisfied customers since service would be better and it may even instill customers to pay higher tips due to the higher level of service.
I believe that if minimum wage were abolished then
unemployment would also be abolished leaving a nation with full employment
which is one of the prime objectives of every government.
Of course, without minimum wage, many of these employees will be working below the poverty line, and this is why I would suggest changing the Working Income Tax Benefit (WITB) found on a Canadian Income Tax Return.
The working income tax benefit (WITB) is a refundable tax credit intended to provide tax relief for eligible working low-income individuals and families who are already in the workforce and to encourage other Canadians to enter the workforce.
The low income cut-offs (LICOs) are income thresholds below which a family will likely devote a larger share of its income on the necessities of food, shelter and clothing than the average family. The approach is essentially to estimate an income threshold at which families are expected to spend 20 percentage points more than the average family on food, shelter and clothing. The first set of published LICOs used the 1959 Family Expenditure Survey to estimate five different cut-offs varying between families of size one to five. These thresholds were then compared to family income from Statistics Canada's major income survey, the Survey of Consumer Finances (SCF), to produce low income rates.
Basically, LICO is the level at which a person is no longer
For the 2014 tax year, Statistics Canada has defined the Low Income Cut-Off at the following rates:
1 person (the sponsor) $23,647
2 persons $29,440
3 persons $36,193
4 persons $43,942
5 persons $49,839
6 persons $56,209
7 persons $62,581
More than 7 persons, for each additional person, add $6,362.
I suggest pegging the LICO to the WITB, which means that if a single person earns $10,000 in a calendar year, then the government will supplement his income with the additional $13,647 which he would need to bring him out of poverty.
If a family of 4 earns $20,000 a year, then the government would supplement this families income with an extra $23,942 to bring said family out of poverty
Approximately 12% of Canadians earn less than LICO, so many people will ask how Canadians can possibly afford to pay for this. Imagine giving an average of $10,000 per year to 12% of working Canadians. There are a total of 35 million Canadians, and according to Stats Can, 69% of those people are of working age. This means there are 24 million working age adults in Canada. 60% of these adults work, which means 14.4 million Canadians pay income tax. 1.5 million Canadians fall into the LICO category.
It would cost the Canadian government an extra 15 billion dollars per year to ensure that poverty was eliminated in Canada. Of course, the question is, "How are we going to pay for this"?
Every percentage point change in the Goods and Services Tax (GST) amounts to about $7.5 billion per year in government revenue. By simply increasing the GST to 6% from the current 5%, $7.5 billion of the $15 billion dollars will be paid, that is half the money required.
I strongly believe in consumption taxes, such as GST and
PST. These taxes are the best way to ensure that those who consume the most pay
the most in taxes. I believe that all GST and PST exemptions should be
eliminated. This means that food and books would be charged the GST because
these exemptions would be eliminated. The reason these exemptions are in place
is to protect the poorest in our society and ensure that they have access to
the food they need but since we have done away with poverty, this means that
everyone can now afford these consumption taxes.
Stats Canada has calculated that there are 13,321,000 households in Canada and that each household spends an average $7,800 per year on food. This means that Canadians spend $104 billion per year on food. If this food was taxed at 6% GST, it would mean an additional $6.25 billion in revenue which is still nearly $1.25 billion shy of paying the extra fee required to ensure all Canadians stay out of poverty.
Canadians spent $21 billion dollars on online sales last year and very little of this money was taxed. If the Canadian government implemented a law ensuring that all online sales within Canada were taxed, this would provide an extra $1.25 billion in revenues for the government.
This tallies up the $15 billion required to eliminate poverty in Canada. It is amazing to live in such a wealthy country that has the means at its disposal to end the sadness and despair of poverty.
All of this scenario considers that the Federal Government shoulders the entire brunt of the responsibility to eradicate poverty in Canada. There are of course other scenarios that could be used by getting the provinces to help with the payments required to make this happen which would help alleviate some of the burden from the Federal government.
Canada Without Poverty (CWP) is a not-for-profit organization dedicated to eradicating poverty in Canada. Its mission statement says “Poverty is a violation of human rights. We work to address the structural causes of poverty by raising awareness, educating and inspiring others to support its eradication in Canada.”
Here is a quote from "CWPs"
Poverty is not only detrimental to the health of Canadians, but has a huge price tag on the health care system. Evidence shows that Canada would save $7.6 billion per year on health expenditures, by merely moving people from the lowest incomes bracket to the second lowest income bracket.
I have stated that it would cost $15 billion per year to eradicate poverty in Canada. According to CWP, $7.6 billion would be saved per year on health expenditures by eliminating poverty. If this is true, then the actual cost of eliminating poverty would only be $7.4 billion dollars. Of course, this savings would not happen overnight. It may take a decade before the impoverished people of today were able to change their lifestyles enough to see these health expenditures diminish, but the fact is that the cost of eliminating poverty would go down on a year to year basis.
Also, the mentality of the poor is usually negative, and this negativity gets pushed down unto their children, which keeps this negative mentality alive in perpetuity. By eliminating poverty, much of this negative feeling will dissipate and create a more positive outlook within the citizens of tomorrow.
Positivity breeds growth and success which will only help the Canadian economy flourish and thrive, making it a greater country year after year.
As can be seen, my scenario of eliminating poverty lies solely on the shoulders of the Federal government, therefore I do not advocate changing any of the provincial social policies.
This means that Quebec can deal with $7 a day daycare on its own. If it feels it should change the rate to $12, that is up to the province.
I do not make any mention about school, students, or tuition costs. Once again, this is a provincial matter, and needs to be addressed by the provinces.
Welfare is also a provincial mandate. I do not advocate eliminating welfare. My policy is only aimed at assisting the working class.
As can be seen, a poverty free Canada is a real possibility, and I aim to continue fighting to ensure that this goal is adopted by our government, after all, there is nothing more demoralizing to an individual than living in poverty, and since we have the tools at our disposal to eliminate this situation, why not work together to protect the weakest members of our society.
Let's work together and create the Canada that we can all be proud of!