JOHN SHAKESPEARE: Time to review income tax exemptions, brackets

Published on April 20, 2017

It is good to see that the MacLauchlan government has a balanced
budget for the first time in several years.
 

Part of attaining a balanced budget, by all accounts, was the excess in
the health care budget, including a few million that was applied to
the deficit in the roads budget a few months ago. Seems as if the
much maligned 'aging population' explanation of heath care shortfalls
by the present government cannot be that much of a burden after all.

Despite this, Health P.E.I. has stated that their budget will increase
by 5.8 per cent this year, after negotiating with the federal government a
few months ago to increase the health care amounts. No wonder that
the feds want a certain portion of the increase to go to specific
areas such as mental health and home care, as opposed to general
revenues. Thankfully, these bells and whistles are in place at last.

This being said, it is somewhat encouraging to see that the basic
personal income tax exemption is to be increased by 2 per cent for 2017. For
2016 the basic personal income tax exemption is $8,000, an increase
over the 2015 amount of 3.8 per cent. So, the percentage was dropped for 2017 to the point of just about covering inflation.

The federal basic personal income tax exemption for 2016 is $11,474, which is $3,474 more than the P.E.I. amount. Most of the federal personal exemptions are yearly indexed to inflation, so how does P.E.I make any headway in increasing the ratio? Given, it is some help to everyone paying taxes.

However, to further help seniors, an increase of the age amount and
pension amount tax exemptions would be helpful. For the 2016 tax year the
P.E.I. age amount now lags behind the federal amount by $3,361, the
federal amount is $7,125. Further, the pension income tax exemption
for P.E.I. is $1,000, the federal amount is $2,000. The age amount and
pension amount have not changed for several years, and P.E.I. tax
brackets have not changed much either. This is really hard to believe.

Taking into account the proposed surplus of the 2017-2018 budget,
although slim, it seems timely to review the income tax exemptions
and tax brackets. It would help a huge amount of Islanders and may
even pull some out of abject poverty, an issue that even is touted by
the MacLauchlan government as being so important to erase.


- John and Mary Shakespeare are retired seniors living in Summerside who have an interest in provincial and federal politics