Federal tax system unfair to Nunavummiut
I applaud Jose Kusugak, the president of Inuit Tapiriit Kanatami, for lobbying the federal government in attempts to have it abolish the GST for Northerners.
However, a Department of Finance official, Pat Breton, replied that the GST is most effective when it’s applied uniformly. Effective for whom? And why insist the policy remain static when the reality is that the northern incomes do not conform to the “uniform?”
Pat Breton also stated that the government provides tax relief through the northern residents deduction. This is true, as the relief provides exemption on taxable income and thereby provides a larger refund, where otherwise there wouldn’t be if there were no deduction.
However, the northern residents deduction is a narrow tax relief in many ways. It’s only available to the main head of the family (it doesn’t take into account that there may be many income earners within a household, which is the reality of many Inuit homes); the maximum allowable has remained the same for several years; there are two parts to the deduction (the basic deduction and the cost-of-living deduction), which makes it complex to determine which household member should claim it for their advantage.
But the most important thing that Pat Breton failed to mention is that the deduction is only advantageous if you have an earned income above the basic tax exemptions. In other words, the deduction is useless for low income people and people on income support. Therefore, many poor northerners are actually affected by the GST in proportion to their incomes.
Northerners are paying heavily for the “uniform” application of federal social welfare programs, in ways that I’ve termed a “double whammy.”
First, eligibility for the GST rebate and the Child Tax Credit is assessed based on income, regardless of where you live. Thus, a northern income is considered the same as one based in the south, without taking into account that many wages are inflated to absorb the higher cost of living. A $20,000 northern income would be, for example, $15,000 in actual southern terms. But the assessment would be based on the $20,000 income and therefore the earner would likely get less GST and Child Tax Credit than his southern counterpart.
Second, the GST rebate and the Child Tax Credit cheques would be set at amounts that are the same as for Southerners, without taking into account the triple costs of food, clothing and other necessities. A $200 cheque buys a lot for a Southerner, but a pittance for a Northerner.
The Liberal federal government has remained staunch on their social welfare programs with respect to the North. Take for example, its position on the Employment Insurance program a few years ago, when an Inuk EI claimant tried to lobby the federal government to increase northern employment insurance cheques to take into account the higher cost of living. That was rejected also.
What does it take to change the federal government’s position? Maybe if Prime Minister Paul Martin had visited a Pond Inlet grocery store back when he visited that community immediately after being elected in 2004, he would have gained some sight into what Inuit have to pay for their bare necessities?
But seriously, many more of us, including major associations and lobby groups in the North have to support Jose Kusugak and ITK in a concerted and well prepared effort to give reasons why the federal government should change its self-beneficial, baseless-seeming policies on “uniformity.”