In this article, we compare the CVITP income ceilings with the poverty lines. This assumes we are comparing apples with apples. However, CVITP income ceilings and the poverty lines are not the same kinds of income.
The CVITP income ceilings are based on total income. (In economics, this is referred to as “market income”. This is very much like the gross salary a person is offered by their employer before all the deductions from their paycheque for tax, employment insurance premiums, Canadian Pension Plan payments, etc.)
Poverty lines, on the other hand, are based on disposable income. (In economics, this is referred to as “after-tax income”. This is what a person has left after everything has been deducted from their gross salary. But it also includes any transfers the federal and provincial or territorial government has made such as the Canada Child Benefits if the person has children, GST/HST credit payments, etc.)
So, is it a problem to compare the two even though they are not the same kinds of income? We think not. Here’s why…
Canada’s tax and benefit system is progressive. This means that:
For people at the high end of the total income distribution, their total incomes will be more than their disposable incomes. (In other words, they pay more to the government than they receive in benefits.)
For people at the low end of the total income distribution, their total incomes will be less than their disposable incomes. (In other words, they pay less to the government than they receive in benefits.)
The focus of the CVITP program is on people at the lower end of the total income distribution. (For example, the CVITP income ceiling for a single person is currently set at $35,000 of total income.) This means that for many of our CVITP clients, their total incomes will be much less than their disposable incomes.
For poor people, their total incomes fall at or below the poverty line (which is based on disposable income). (In preparing the income tax and benefit returns for many CVITP clients, we tend to think of their total income as the sum of their T slips. This is the recommended way of running CVITP clinics as it is a simple measure to use. Yet if their T slips are for provincial social assistance or again for the Guaranteed Income Supplement, for the purposes of this article we should remember that these are not strictly speaking part of total income but of disposable income.)
If the CVITP were serving only the poor, this means that the CVITP (total) income ceilings would be below the (disposable) incomes that define the poverty lines.
Yet in the article we show that, with the exception of the poverty lines for large families in urban centres, the CVITP income ceiling guidelines are consistently above the poverty lines. The consequence is that the CVITP clinics serve many clients with total incomes above the poverty lines and thus with disposable income well above the poverty lines. In other words, they are not poor.
This is not a problem. The CVITP clinics are intended to serve not only clients with low incomes but also those with modest incomes.