The Hidden Welfare System
A report on the personal income tax system in Canada

Date Written:  2008-01-08
Publisher:  National Council of Welfare, Ottawa, Canada
Year Published:  1976
Pages:  40pp   Resource Type:  Article
Cx Number:  CX195

A critical analysis of the Income Tax Act and deductions that benefit the top 5% of filers.

Abstract: 
There are two welfare systems in Canada, one for the poor, the other for everyone else. This latter system transfers far more money than the poor receive for their system and its benefits go to millions of persons. It is not called a welfare program. It is called the Income Tax Act. This report documents with examples and
figures how this hidden welfare system works through mechanisms such as the Registered Retirement Savings Plan, Registered Pension Plans, Registered Home Ownership Savings Plans, Interest Income Deductions, etc. An estimated cost to Canadians of $2.6 billion is generated by ten of these deductions. Seventy- five percent of all the tax savings generated by these combined deductions go to the top 5% of filers. The report recommends that those deductions and exemptions be abolished and replaced by credits that extend the same benefits to all. The National Council of Welfare has also published reports on income security, social employment, community organization, poor people's groups, legal aid/legal services and other issues. Write for further information.