Low income seniors face extremely heavy tax burdens across Canada, according to a new C.D. Howe Institute report released Thursday (November 13). In “Who Loses Most? The Impact of Taxes and Transfers on Retirement Incomes,” authors Finn Poschmann and Alexandre Laurin show that seniors can be hit hard by taxes and benefit clawbacks in retirement.
“Our analysis shows that effective tax rates are very high for low-income seniors, and taper off for seniors with higher incomes. The trend is especially true in the Western provinces, notably in Saskatchewan, Manitoba and British Columbia,” said Laurin in a press release Thursday.
The authors’ calculations indicate that low income employees who save under new pension plans in the provinces of Ontario and Quebec will receive very little net benefit from the savings they put aside.
The study suggests “The result of these heavy tax burdens – punitive in some cases – is that many seniors are unrewarded for their past earnings, savings, and foregone consumption.”
More information:
C.D. Howe Institute press release – How Tax and Benefit Clawbacks can Clobber Retirement Income – here
C.D. Howe Institute study – Who Loses Most? The Impact of Taxes and Transfers on Retirement Incomes (pdf) – here
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