http://tinyurl.com/fr8au                                             
                                                                            





Rich-poor gap growing: NDP
May 11, 2006. 07:38 PM
SANDRA CORDON
CANADIAN PRESS


OTTAWA — Does it feel like you’re working harder than ever, yet taking home
less? It might not be just your imagination, says the federal NDP.
The gap has been steadily widening between well-off Canadians and
modest-income earners over the past several years, say New Democrat MPs.

And last week’s federal budget has done nothing to help narrow the
difference, they add.

People in the top bracket, earning more than $85,700 a year, have seen
their incomes rise 15 per cent between 1989 and 2004, MPs said Thursday,
citing data from Statistics Canada.

Yet over the same period, people earning $20,400 or less saw their income
actually shrink by nine per cent, says NDP finance Critic Judy
Wasylycia-Leis.

Even middle-class Canadians, in the $56,600 to $85,700 income bracket, have
barely kept up with inflation during that 15-year period, enjoying a mere
two per cent increase.

“The rich are getting richer and most Canadian families have seen their
real income decline since 1989,” Wasylycia-Leis said.

MP Peter Julian said the budget — the first for Conservative Prime Minister
Stephen Harper — won’t help families at the modest end of the income scale.

“People are finding it more and more difficult to make ends meet and. .
.governments are not responding to what is a growing income crisis,” he
said.

The MPs used 1989 as a point of comparison because, they say, that’s when
the North American Free Trade Agreement of 1988 began to seriously change
the nature of jobs and incomes in Canada.

Since then, they argue, more people have been forced into low-income jobs,
part-time work and temporary positions as companies struggle to compete
globally.

The centrepiece of the Tory budget — a one percentage point cut to the GST
— will be a much greater boon to high rollers than poorer families. That’s
because the rich have much more discretionary income to spend and
therefore, will get a better break.

Low-income families will also save, but most of their incomes is spent on
essentials like food and rent, which are already GST exempt.

The Tory plan will be very good for modest income earners, Finance Minister
Jim Flaherty insisted Thursday.

“The reduction in the GST by one point will benefit, above all, the
one-third of low income Canadians who actually do not pay income tax,” he
told the Commons.

Yet studies of the GST cut have questioned its progressivity, pointing out
it gives the rich precisely the same tax break as the poor.

Besides the GST cut, the budget also included several targeted income tax
measures plus a new family allowance program that gives $1,200 per year
(minus taxes) to families with children under age six.

The baby bonus is particularly good for two-income families of modest
means, according to the Canadian Institute of Chartered Accountants

It figures a two-income family making a total of $30,000 with $5,000 in
child-care expenses will save about $836 on this year’s taxes under the new
budget.

A dual-income family earning $60,000 with similar child-car costs will save
about $706 in federal taxes.

The NDP report on stagnant incomes comes at the same time that stock market
investors are seeing rocketing returns on investments, especially in the
resource sector.

Company directors have also been enjoying much higher pay packets —
compensation increased by 41 per cent between 2002 and 2004, according to a
survey by the Conference Board of Canada.

Using a constant 2004 dollar value for all comparisons, the NDP say the
lowest three income brackets, comprising 60 per cent of taxpayers, have
lost ground since 1989.

Their research looks at total income earned before any adjustments for tax
credits or tax paid.

Family income has a major impact on the well-being of children, with
high-income families reporting better outcomes for their kids, according to
a new report also released Thursday by Statistics Canada.

Higher incomes at home tend to be related to better physical,
social-emotional, cognitive and behavioural well-being among children,
concludes the study conducted by Human Resources and Social Development
Canada and the Research Data Centre program

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