I picked up the P.E.I. forms the other day and with nothing else to do I decided to check out the low-income workers tax. I have been complaining about it for years.
This is what I found.
If an Islander works 2,000 hours a year at minimum wage, he/she earns $22,000. This is considered at the poverty line. Then he/she files their tax returns.
Provincial tax, with total earnings of $22,000, of that $8,000 is basic non-refundable. The taxable income you can claim is $14,000.
At 9.8 per cent, P.E.I. tax is $1,578.90.
federal tax, earning $22,000 a year, $11,474 is basic non-refundable. The total taxable income is $10,576.
At 15 per cent, federal tax is $1,578.90.
By April 30, they will have to pay $2,950.90 in taxes. This essentially reduces wages from 11/hour to 9.52/hour. How in the blazes can someone working for minimum wage come up with nearly $3,000 in taxes.
This is akin a crime and should not happen.
The basic non-refundable is the amount of money you are allowed to earn before you have to pay income tax.
The P.E.I. government states you can only earn $8,000 before you start to pay it. Then, you are charged 9.8 per cent on every dollar you earn over that amount.
Whereas the federal government states you can only earn $11,474 before paying income tax. You are then charged 15 per cent for every dollar earned over that amount.
The non-refundable and percentage is different for every province and also federally.
P.E.I. is the worst and Saskatchewan is the best for low-income workers.
If the government in its infinite wisdom has determined a minimum wage for a worker to make ends meet and provide for his family, why then, are both provincial and federal governments applying any tax to their minimum wage earnings?
Why not have the non-refundable for everyone based on the minimum wage? Imagine how much the government would save on paperwork.
Another stupid law we have in Canada is not taxing Lotto winnings.
Millions of dollars are won every year by less than one per cent of our population. They do not pay one cent of taxes on their winnings, while low-income workers have to pay 24.8 per cent on every dollar they earn over $12,000.
This is not fair.
All winnings over $100,000 should be taxed at 30 per cent with exceptions for charitable organizations.
The money received from this tax should go towards the assistance for seniors and veterans.
I would appreciate hearing comments both pro and con from others. My email is firstname.lastname@example.org