Peter Weltman, Financial Accountability Officer of Ontario, has just released a commentary Comparing the LIFT Credit to a Minimum Wage Increase.
“The LIFT credit will provide fewer benefits to minimum wage workers than increasing the minimum wage from $14 per hour to $15 per hour,” says Weltman.
The Province introduced the LIFT credit to provide tax relief to low-income individuals and families, including those earning minimum wage. The FAO estimates that 1.0 million Ontarians will receive an average LIFT credit of $409 in 2019 and the LIFT credit will provide a total of $418 million of tax relief.
For comparison, there are 1.3 million Ontarians that would have received an average after tax benefit of $810 from increasing the minimum wage to $15 per hour. However, only 38 percent of minimum wage earners in Ontario will receive the LIFT credit, and those individuals will receive fewer benefits from LIFT than an increase in the minimum wage.
“Many minimum wage earners do not pay provincial tax therefore they will not benefit from the LIFT credit,” says Weltman.
Combined, lost provincial tax revenue from cancelling the minimum wage increase and the cost of the LIFT credit will worsen the Province’s budget balance by a total of $1.9 billion from 2018-19 to 2022-23. The cost of the LIFT credit is projected to peak in 2019-20 and gradually decline thereafter, as the credit is not indexed to inflation.
Chosen excerpts by Job Market Monitor. Read the whole story at MEDIA RELEASE: LIFT credit will provide fewer benefits to Ontarians than cancelled minimum wage increase