Raise income tax exemption to help low wage earners CFIB suggests
'It’s been a policy that has been most unfair to minimum wage earners in the province'
The P.E.I. government should raise its personal income tax exemption the Canadian Federation of Independent Business suggests.
Personal income tax exemptions, the basic amount of income on which no tax is paid, has not increased on P.E.I. since 2008. At $7,708, it is currently the lowest in the country.
The CFIB argues that raising the personal income tax exemption will increase the amount of money in the pockets of low-wage earners just as increasing the minimum wage does.
"It's a real frustration for business owners," said Erin McGrath-Gaudet, CFIB's director for P.E.I., in a news release.
"Over the past number of years we've seen some significant jumps in minimum wage. It can be a big cost for some businesses but government is the biggest winner because of the increased tax bite on those same workers."
According to CFIB calculations, a full-time worker on minimum wage in 2001 would have paid 3.3 per cent of their income in tax. That same worker will pay 5.9 per cent in 2016.
The CFIB stated, "It's been a policy that has been most unfair to minimum wage earners in the province."
Seven provinces and the federal government tie personal income tax exemptions and tax brackets to inflation.
Provincial officials in P.E.I. say they have moved to reduce taxes for low-income Islanders.
Changes in 2015, they say, provided income-tax relief to 12,000 Islanders, eliminating provincial income tax entirely for 2,500 of them.
The province has said it will look at additional options for income tax relief once the budget is balanced.