More than 60 per cent of lower-income families in
Canada now paying higher federal income taxes

VANCOUVER—The majority of lower-income families in Canada with children are
paying higher income taxes now because of the federal government’s tax changes,
finds a new study released today by the Fraser Institute, an independent, non-partisan
Canadian public policy think-tank.
“Ottawa has enacted a series of tax changes that have actually raised income taxes on
hundreds of thousands of Canadian families in the bottom 20 per cent,” said Charles
Lammam, director of fiscal studies at the Fraser Institute and co-author of Effect of
Federal Income Tax Changes on Canadian Families Who Are in the Bottom 20
Percent of Earners.
The study finds that the federal government’s tax changes, implemented since the
2015 election, have raised income taxes for the majority (61 per cent) of taxpaying
Canadian families in the bottom 20 per cent of earners, which includes families with
children with incomes up to $66,448.
While the government reduced the second-lowest personal income tax rate (from 22 to
20.5 per cent), that rate reduction only applies to individual incomes between $45,916
and $91,831 so many families in the bottom 20 per cent did not receive any benefit
from the tax rate cut.
At the same time, the federal government eliminated income splitting for couples with
young children as well as a host of tax credits, including the children’s fitness tax
credit and the public transit tax credit.
When taken together, these changes have increased income taxes on the majority of
families in the bottom 20 per cent who are now paying $269 more, on average, per
While not included in the study, which focuses specifically on taxes, the authors
acknowledge that the federal government increased government transfers to families
with children in the form of a higher Canada Child Benefit. It is critical, however, to
differentiate between tax changes, which influence the amount of earnings workers
keep for themselves, compared to government transfers.
“Tax relief leaves Canadians with more of their own money, which encourages self sufficiency
and incentivises success, which is distinctly different from relying on
government transfers” Lammam said.

Charles Lammam, Director, Fiscal Studies
Fraser Institute