Tinkering with the GST credit may sound helpful, but it isn’t the kind of relief most families are looking for

Prime Minister Mark Carney is embracing the politics of economic tinkering, offering a rebranded, narrowly targeted GST credit top-up when Canadians need broad, structural relief. While the government says it is responding to the affordability crisis, modest tweaks to the GST credit will not deliver the kind of meaningful, universal relief that cutting income taxes would.

The newly named Canada Groceries and Essentials Benefit will provide a one-time top-up payment this spring to those families who currently get the GST credit and will boost payments by 25 per cent for five years, beginning in July.

The government says the benefit will also become available to 500,000 new individuals and families.

According to the government’s backgrounder, up to 12.6 million Canadians could benefit from the program.

But those headline numbers hide a major flaw.

The Carney government’s targeted GST credit top-up is a band-aid solution to Canada’s affordability crisis.

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Plus, there are millions of hard-pressed Canadians who don’t qualify.

According to the Canada Revenue Agency, a single person without children no longer qualifies for the benefit when they earn $56,181 or more. And for a married couple with no children, the cutoff is just over $59,000.

Even for families with four children, once both parents are earning a combined $74,201, the benefit goes vamoose.

With housing, food, transportation, and clothing costs out of control in parts of the country, those income thresholds are awfully low for Canadian families still struggling to make ends meet.

The Liberals appear to show little concern for the state of Canada’s deficit, which is sitting at a record-breaking $78 billion for a nonpandemic year, so why not go big when it comes to delivering relief for hard-working families?

Why not take aim at Canada’s burdensome income taxes instead?

Now is the time to dramatically lower the income tax burden for Canadian families, in a way that benefits all Canadians.

Instead of having the government take with one hand and give back with the other, it’s time to have the government take less to begin with.

For the 2025 tax year, the basic personal amount, which is essentially the amount of income you can earn without having to pay federal income tax, is $16,129.

Why not dramatically increase the basic personal amount to ensure that all Canadians can earn more tax-free? If the basic personal amount were increased to $25,000, for example, that could encourage Canadians sitting on the sidelines to return to the workforce, while delivering significant relief to working Canadians already in it.

All income between $16,129 and $25,000 is currently taxed at 14 per cent, so raising the basic personal amount to $25,000 would save every Canadian who earns at least $25,000 no less than $1,241.94 a year. A two-income-earner family would save nearly $2,500 a year.

And because every Canadian earning over $25,000 would save the same amount on their taxes, it would benefit those with low and middle incomes the most.

The naysayers will say that leaving that much money in the pockets of Canadians is more than the government can afford.

But at a time when over 40 per cent of Canadians say they’re $200 away from not being able to pay their bills, it’s time to ask the government, not Canadians, to tighten its belt.

When was the last time Ottawa did a comprehensive review of every dollar the federal government spends? Instead of simply increasing departmental budgets each and every year, it’s time to see cuts, not just reductions in the rate of spending growth, but actual cuts.

Yes, there are some areas where spending needs to keep rising, such as national defence, but after 10 years of largess under the Trudeau regime, there are surely others that could use some cutbacks.

If there’s a choice to be made between leaving more money in Canadians’ pockets and giving more money to bureaucrats in Ottawa, it’s a safe bet that the majority of Canadians would want to see relief.

It’s good to see the Carney government recognize that Canadians are facing an affordability crisis, but tinkering with the GST credit simply won’t cut it. Now is the time to be bold, including substantially increasing the basic personal amount to deliver relief to all working Canadians.

Jay Goldberg is a fellow with the Frontier Centre for Public Policy.

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