MP releases Library of Parliament study showing 115% effective tax rates on some low-income disabled workers


OTTAWA, ON — Member of Parliament Pierre Poilievre is calling on all levels of government to “make work pay” for low-income disabled people, after a Library of Parliament report showed minimum wage-earners paying marginal effective tax rates of up to 115%. When disabled people on social assistance get jobs, they pay taxes and lose income support. The amount they lose on each new dollar earned is their “marginal effective tax rate” (METR), which Poilievre calls the “Disability Tax.”


The report shows that federal and provincial taxes and clawbacks cause many low-wage disabled people to be worse off if they work additional hours or earn a pay raise. For example, a minimum wage-earner working 40 hours a week in Alberta loses $1.15 for every extra dollar earned. A disabled Quebec worker putting in 24 hours a week would lose $1.18 for each extra dollar. These marginal effective tax rates of over 100% equal a negative wage, which means working harder or longer often makes the disabled person poorer. On top of clawbacks and regressive taxes, many provinces take away housing and drug benefits from disabled people as soon as they earn a stable income.


Specifically, Poilievre is calling for:


  • Parliament to pass a motion tasking the Parliament Budget Officer with reporting annually on the Marginal Effective Tax Rates low-income disabled people pay in each province. That would shine the light and force accountability on governments that punish work;
  • At the next meeting of federal-provincial Finance Ministers, all governments should agree on a coordinated plan to cap marginal effective tax rates at a maximum 50% for all disabled Canadians. The $222 million the federal government transfers to the provinces under the Labour Market Agreements for Persons with Disabilities should be conditional on meeting this cap; and
  • The Finance Department to enrich the federal Working Income Tax Disability Supplement—which boosts earnings of disabled employees—to make work pay.


Poilievre also wants to see these recommendations included in an upcoming poverty reduction report from the human resources committee. The committee has spent the last seven months studying poverty reduction strategies, where a number of witnesses spoke about how to get more disabled persons working and removing disincentives to work such as large clawbacks.


“I would like to thank the Library of Parliament for a very rigorous and detailed study. These anti-work policies force an ugly choice on the disabled: either they stay poor and on welfare forever, or they work and get even poorer. Evidence is overwhelming that disabled persons can and desperately want to work. One million disabled people have jobs in Canada. Smart employers like Tim Horton’s, Costco, Walgreens, and many others hire them and pay full wages with no government subsidies. Almost 800,000 additional disabled people, whose disability does not prevent them from working, do not have jobs. Half of them have a post-secondary education. The ‘Disability Tax’ is holding them back,” said Poilievre.


“The Disability Tax is not a partisan issue. Conservative, New Democrat and Liberal governments at both provincial and federal levels have added layers of taxes and social assistance clawbacks that punish disabled people for the crime of working hard. We are all to blame. Let’s fix it now, make work pay, and let these courageous people earn an independent living,” Poilievre concluded.



Read the report from the Library of Parliament here.

Read a related government report on this issue here.