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Budget 1999
Providing Tax Relief and Improving Tax Fairness: 2
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Archived - Assistance to families with children

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Supporting families and reducing child poverty

The 1999 budget builds on measures introduced in previous budgets to provide additional assistance for families with children through the Canada Child Tax Benefit (CCTB). The CCTB has two components: a base benefit and a supplement for low-income families. The supplement is an integral part of the National Child Benefit (NCB) system, a federal-provincial-territorial initiative to support families and reduce child poverty.

The CCTB ensures that most taxpayers with children pay less tax than individuals with similar incomes but no children.
The NCB ensures that low-income parents do not lose income supports and services when moving from welfare to the workforce.

CCTB/NCB

The 1998 budget committed an additional $850-million federal contribution to the NCB, to be delivered in two $425-million investments in July 1999 and July 2000, bringing the federal investment in the NCB to $1.7 billion.

The 1999 budget sets out the design for the $850-million increase in assistance, agreed to by federal, provincial and territorial governments. Under this design, low-income families would receive an increase of $350 per child in the NCB supplement.
The design also increases the maximum level of income at which the NCB supplement benefits are provided from $25,921 to $29,590. This will allow for a more gradual phase-out of benefits and will provide more money to modest-income families to support their children.

Extending benefits to modest- and middle-income families

The 1999 budget proposes to allocate an additional $300 million in July 2000 to enhance CCTB benefits for modest- and middle-income families.

This will be done through an increase in the income threshold at which CCTB base benefits start to be reduced from $25,921 to $29,590.
This measure will provide increased child benefits to 2 million modest- and middle-income families.

Significant benefits for families

Total federal support for families through the CCTB has increased by $2 billion through the measures in the 1997, 1998 and 1999 budgets, and will reach an annual level of close to $7 billion by July 2000. This investment provides substantial benefits to families. By July 2000:

the maximum CCTB benefits will reach $1,975 for the first child and $1,775 for each additional child;
a typical two-child family with family income of $20,000 will receive $3,750 in CCTB benefits compared to $2,540 in 1996, an increase of $1,210 or 48 per cent; and
a family with two children and an income of $50,000 will receive $1,020 in CCTB benefits compared to $836 in 1998, an increase of $184 or 22 per cent for that family.

Substantial and Fair Tax Relief

As shown in Tables 1 through 8, combined with 1998 budget measures, the 1999 budget provides substantial and fair tax relief. Tables 3 through 8 indicate tax relief based on the situation of specific taxpayers such as marital status, family size and annual income.

The 1999 budget actions will provide Canadians with $1.5 billion of tax relief in 1999-2000, $2.8 billion in 2000-01 and $3.4 billion in 2001-02. Together, the 1998 and 1999 budgets and the $800-million EI premium rate reduction for 1999-2000 will provide $17.3 billion in tax relief over the three fiscal years from 1999-2000 to 2001-02.

Table 1
Impact on federal revenues

General tax relief and Canada Child Tax Benefit (CCTB)	1999-2000	2000-01	2001-02	3-year cumulative impact


	(millions of dollars)
Measures effective July 1, 1999
Extension of $500 supplement to all taxpayers	-665	-1,110	-1,290	-3,065
$175 increase in tax-free income	-270	-450	-525	-1,245
Elimination of 3% surtax	-595	-995	-1,150	-2,740
Total	-1,530	-2,555	-2,965	-7,050
Tax fairness measures	-15	-25	-100	-140
Increase to CCTB¹	0	-225	-300	-525
Total-1999 budget	-1,545	-2,805	-3,365	-7,715
Memorandum item: 1998 budget
General and tax fairness measures	-2,070	-2,405	-2,425	-6,900
Increase to CCTB for low-income families²	-320	-750	-850	-1,920
Total-1998 budget	-2,390	-3,155	-3,275	-8,820
Total-1998 and 1999 budgets	-3,935	-5,960	-6,640	-16,535

¹ Effective July 2000. The amount is in addition to the cumulative $1.7-billion increase in CCTB in the 1997 and 1998 budgets. ² $425 million effective July 1999 and an additional $425 million effective July 2000.

The 1998 budget provided tax reductions for 14 million Canadian taxpayers. The 1999 budget will provide tax reductions for all 15.3 million Canadian taxpayers. As a result of the 1998 budget, 400,000 low-income Canadians will no longer pay any federal income tax whatsoever. The 1999 budget removes an additional 200,000 from the tax rolls for a total of 600,000.

Table 2
Impact on taxpayers -- mature system

	Number of taxpayers

General tax relief and Canada Child Tax Benefit (CCTB)	1998 and 1999 budgets	1998 budget	1999 budget

Changes to personal amounts¹
Number with tax reductions²	15,700,000	5,000,000	15,300,000
Number removed from the tax rolls	600,000	400,000	200,000
Elimination of 3% surtax
Number with tax reductions³	15,100,000	14,000,000	2,700,000
Increase to CCTB
Number of families with
CCTB increases⁴	3,300,000	1,400,000	2,000,000
Number of families added to
CCTB eligibility⁵	100,000	--	100,000

¹ Includes extension of $500 supplement to all taxpayers and $175 increase in tax-free income. ² The 1999 budget provides tax reductions to all 15.3 million taxpayers remaining after the 1998 budget removed 400,000 from the tax rolls. Consequently all 15.7 million taxpayers receive tax reductions from the two budgets combined. ³ The 1999 budget eliminates the surtax for the 2.7 million taxpayers who remained liable for the surtax following the 1998 budget measures. This number includes taxpayers who received only partial relief from the surtax in the 1998 budget. ⁴ The total number of families receiving CCTB benefits following the full implementation of the 1999 budget measures will be 3.3 million. Some families gain from benefit increases provided by both the 1998 and 1999 budgets. ⁵ As a result of the 1998 budget, the number of families eligible for the NCB supplement will increase by 175,000. However, the number of families eligible for the CCTB remains unchanged as these families were already receiving the base benefit.

Table 3
Typical single individual
Full-year impact of proposed measures

			1999 budget tax relief measures


Total income	Federal tax¹ pre-1998 budget	1998 budget impacts	Extending the $500 supplement	$175 increase to basic amounts	Surtax elimination	Canada Child Tax Benefit	Total 1999 budget	Total 1998 and 1999 budgets	Total 1998 and 1999 as a % of federal tax²,³	Federal tax post-1999 budget

$	$	$	$	$	$	$	$	$	$, %	$
7,500	-98	-85	-4	-30	0	0	-34	-119	-119	-217
10,000	262	-80	-21	-30	0	0	-51	-131	-50.0%	131
15,000	1,047	-70	-55	-30	0	0	-85	-155	-14.8%	892
20,000	1,866	-63	-85	-30	0	0	-115	-178	-9.5%	1,688
25,000	2,685	-87	-85	-30	0	0	-115	-202	-7.5%	2,483
30,000	3,746	-112	-85	-30	0	0	-115	-227	-6.1%	3,519
35,000	5,128	-149	-85	-30	0	0	-115	-264	-5.1%	4,864
40,000	6,429	-187	-85	-30	0	0	-115	-302	-4.7%	6,127
45,000	7,768	-226	-85	-30	0	0	-115	-341	-4.4%	7,427
50,000	9,107	-219	-93	-32	-35	0	-160	-379	-4.2%	8,728
55,000	10,446	-141	-93	-32	-152	0	-277	-418	-4.0%	10,028
60,000	11,810	-62	-93	-32	-272	0	-397	-459	-3.9%	11,351
65,000	13,324	0	-92	-32	-384	0	-508	-508	-3.8%	12,816
75,000	16,456	0	-92	-32	-471	0	-595	-595	-3.6%	15,861
100,000	24,286	0	-92	-32	-689	0	-813	-813	-3.3%	23,473

¹ Includes federal income tax and the goods and services tax (GST) credit. Does not include provincial income tax. The negative value indicates that refundable GST credit received is greater than income tax paid. ² The negative value indicates a reduction in net tax paid to the federal government. ³ Typical singles at an income of about $7,500 and less receive more in federal refundable credit (GST credit) than they pay in federal income tax. The federal tax reduction indicated in bold therefore represents the increase in the net benefits they receive from the tax and transfer system. Percentage is not meaningful so the dollar amount is repeated.

Table 4
Typical one-earner family of four
Full-year impact of proposed measures

			1999 budget tax relief measures


Total income	Federal tax¹ pre-1998 budget	1998 budget impacts	Extending the $500 supplement	$175 increase to basic amounts	Surtax elimination	Canada Child Tax Benefit²	Total 1999 budget	Total 1998 and 1999 budgets	Total 1998 and 1999 as a % of federal tax³, ⁴	Federal tax post-1999 budget

$	$	$	$	$	$	$	$	$	$, %	$
13,500	3,708	-163	0	0	0	-700	-700	-863	-863	-4,571
15,000	-3,462	-174	-7	-60	0	-700	-767	-941	-941	-4,403
20,000	-2,643	-164	-41	-60	0	-700	-801	-965	-965	-3,608
25,000	-1,000	-154	-75	-60	0	-719	-854	-1,008	-1,008	-2,008
30,000	451	-145	-109	-60	0	-184	-353	-498	-110.4%	-47
35,000	2,233	-149	-143	-60	0	-184	-387	-536	-24.0%	1,697
40,000	3,938	-160	-170	-60	0	-184	-414	-574	-14.6%	3,364
45,000	5,527	-199	-170	-60	0	-184	-414	-613	-11.1%	4,914
50,000	7,116	-238	-170	-60	0	-184	-414	-652	-9.2%	6,464
55,000	8,705	-197	-185	-65	-60	-184	-494	-691	-7.9%	8,014
60,000	10,319	-117	-185	-65	-179	-184	-613	-730	-7.1%	9,589
65,000	12,063	-30	-185	-65	-310	-184	-744	-774	-6.4%	11,289
75,000	15,469	0	-184	-64	-440	0	-688	-688	-4.4%	14,781
100,000	23,299	0	-184	-64	-658	0	-906	-906	-3.9%	22,393

¹ Includes federal income tax, refundable Canada Child Tax Benefit (CCTB) and the goods and services tax (GST) credit. Does not include provincial income tax. Negative values indicate that refundable CCTB and GST credits received are greater than income tax paid. ² Design change announced in the 1999 budget – includes the effect of the $850-million increase announced in the 1998 budget as well as the $300-million increase announced in the 1999 budget. ³ Negative values indicate a reduction in net tax paid to the federal government. ⁴ Typical one-earner families of four at incomes of about $25,000 and less receive more in federal refundable credits (CCTB and GST credit) than they pay in federal income tax. The federal tax reduction indicated in bold therefore represents the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.

Table 5
Typical two-earner family of four
Full-year impact of proposed measures

		1999 budget tax relief measures


Total income	Federal tax¹ pre-1998 budget	1998 budget impacts	Extending the $500 supplement	$175 increase to basic amounts	Surtax elimination	Canada Child Tax Benefit²	Total 1999 budget	Total 1998 and 1999 budgets	Total 1998 and 1999 as a % of federal tax³, ⁴	Federal tax post-1999 budget

$	$	$	$	$	$	$	$	$	$, %	$
20,000	-3,345	-173	-18	-60	0	-700	-778	-951	-951	-4,296
25,000	-2,687	-165	-45	-60	0	-700	-805	-970	-970	-3,657
30,000	-1,368	-156	-77	-60	0	-712	-849	-1,005	-1,005	-2,373
35,000	-8	-117	-85	-30	0	-344	-459	-576	-576	-584
40,000	1,311	-161	-102	-60	0	-184	-346	-507	-38.7%	804
45,000	2,609	-171	-116	-60	0	-184	-360	-531	-20.4%	2,078
50,000	3,716	-183	-129	-60	0	-184	-373	-556	-15.0%	3,160
55,000	5,063	-201	-143	-60	0	-184	-387	-588	-11.6%	4,475
60,000	6,410	-219	-157	-60	0	-184	-401	-620	-9.7%	5,790
65,000	7,764	-238	-170	-60	0	-184	-414	-652	-8.4%	7,112
75,000	10,437	-304	-170	-60	0	-95	-325	-629	-6.0%	9,808
100,000	16,498	-199	-178	-62	-272	0	-512	-711	-4.3%	15,787

¹ Includes federal income tax, refundable Canada Child Tax Benefit (CCTB), and the goods and services tax (GST) credit. Does not include provincial income tax. Negative values indicate that refundable CCTB and GST credits received are greater than income tax paid. ² Design change announced in the 1999 budget — includes the effect of the $850 million increase announced in the 1998 budget as well as the $300 million increase announced in the 1999 budget . ³ Negative values indicate a reduction in net tax paid to the federal government. ⁴ Typical two-earner families of four at incomes of about $35,000 and less receive more in federal refundable credits (CCTB and GST credit) than they pay in federal income tax. The federal tax reduction indicated in bold therefore represents the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.

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