Confidential Note on Poverty

It was almost comical to receive a response to a freedom of information request in an envelope stamped "CONFIDENTIAL Only to be Opened by Addressee", yet that is how I obtained the briefing notes that Claude Richmond, Minister of Employment and Income Assistance, used when he attempted to minimize the extent of child poverty. Surely the Campbell government must know that most government documents, especially those they must release under the Freedom of Information and Protection of Privacy Act, are public and could be posted to a government website.

Richmond's briefing note began with advice to say "All of us take child poverty very seriously" before it went on to site job growth, reductions in the number in welfare recipients, and tax cuts as arguments for the claim that the government is supporting low-income families.

In order to see how badly the Campbell government misrepresents the extent of poverty, it is useful to keep in mind some basic statistics that describe the size and income of British Columbians. Since many of those statistics come from income tax returns which aren't filed until the April after the year in which income is received, and aren't tabulated until some months later, they are always at least two years old. The most recent tax data broken down by province and income are for the tax year 2003.

Notice the 11% difference between those reporting employment income and those counted by Statistics Canada as employed. The difference has much more to do with how employment is defined in the Labour Force Survey than it does with any under reporting of taxable income. While 2,962,200 tax returns were filed by British Columbians in 2003, only 1,892,330 required provincial income tax to be paid.

In 2003, over 98% of the 964,530 British Columbians who reported incomes in excess of $35,000 ended up paying some provincial income tax. Many of the 1,997,670 British Columbians who reported less than $35,000 in income are poor, and many have children. For the 1,392,700 who reported incomes less than $20,000, 379,040 didn't pay provincial income tax. The non-refundable provincial tax credit of $360 (less 3.6% of income in excess of $16,000) announced prior to the 2005 election further increased the number who will pay no provincial income tax, but their savings pales by comparison with the break given to high income earners in 2001. The benefit from a nonrefundable credit cannot exceed the amount owed in taxes, and the poorest people don't pay much income tax. In 2003, 616,160 British Columbians reported incomes between $1 and $10,000, but only 34,170 paid provincial income taxes, averaging $59.58 per taxpayer; that is all the benefit those 34,170 people will get from the new tax credit. In 2003, 355,080 British Columbians reported incomes between $10,000 and $15,000, but only 137,760 paid provincial income taxes, averaging $165.32 per taxpayers; that is what the new tax credit is worth on average to those 137,760 people. By comparison, the value of the 2001 tax cut can be seen by examining taxation statistics published by Revenue Canada for tax years 2000 and 2003. The 12,300 who reported incomes in excess of $250,000 in 2003 paid an average of $20,899.59 less in provincial income tax than they paid in 2000; incidentally, 2,370 of those lucky folks collected Canada Pension Plan (CPP) benefits. The 2001 tax cut is worth more for those 12,3000 people than the total income tax benefit of more than 1.4 million fellow citizens who filed tax forms reporting less than $20,000 in income, and it makes a joke of the few hundred dollars very low income people saved from both the 2001 and 2005 tax cuts. That is why it is pathetic for the Campbell government to claim that children living in poverty are significantly helped by tax cuts. They did the right thing in eliminating the few income taxes those families paid, but the amounts are trivial relative to what has been lost through the reduction in benefits: child protection, legal aid, welfare eligibility and numerous user fees.

There are far more people living in poverty than there are people receiving provincial welfare. In 2003 there were 117,999 "cases" (individuals and families), 175,640 "clients" (including spouses and 47,313 children), receiving income assistance in BC. Richmond's briefing note says the number of children was down to 35,000 in December 2005, but it doesn't say whether their parents are on the street or in a job. The number of "cases" is just 19% of the 616,160 people who filed income tax returns with income between $1 and $10,000. Almost half, 46.8%, of the people with less than $10,000 in annual income reported income from employment; 12.4% report income from the Canada Pension Plan (CPP). A further 638,160 people filed income tax returns with income between $10,000 and $20,000 with 49.6% showing income from employment, and 35.8% showing income from CPP. Low income people include those who are working and pensioners, and vastly exceed the number of people receiving any form of welfare. Helping those people requires social housing programs, tough enforcement of employment standards and opportunities for training and advancement. The very least the Campbell government could do is to acknowledge that hundreds of thousands of British Columbians are not sharing the province's prosperity.