Canadians do not claim considerable sums to which they are entitled due to an overly complex tax system, says a Montreal Economic Institute (MEI) viewpoint publication released on March 12.
240,000 low-income Canadians eligible for the Canada Workers Benefit do not receive it and over a million adults eligible for the Disability Tax Credit do not claim it, says Luc Vallée, chief operating officer and chief economist at the MEI.
Vallée says, "While the Income Tax Act was 4,000 words long in 1917, today it comprises over 1.1 million words. Just since 2005, it has gotten more than a third longer. It's a monster that we keep feeding, and it keeps growing."
The number of personal income tax breaks, including credits, deductions, and exemptions, have increased by 39 per cent between 1991 and 2015, their total value reaching over $84 billion, he adds. "Even accountants think our tax system is too complex," observes Vallée, recalling that a large majority of them (71%) were of this opinion when polled two years ago.
"It would be much more beneficial for the entire population to abolish the multitude of exemptions and tax credits that exist, and replace them with a corresponding reduction in income tax rates, or a raising of exemption thresholds. This would be the best way to help everyone, especially the most vulnerable," says Vallée.
To learn more, consult the publication When Taxpayers Don't Get What They Are Due here.
