Here’s how to improve transit tax credits

Re: Transit lessons from Calgary, April 15.

Alex Cullen’s article was a very thoughtful contribution. Most people will know that the federal government currently has a personal income tax credit to encourage the use of public transit.

The credit provides tax benefits worth 15 per cent of the cost of public transit passes.

A Finance Canada study in 2011 showed that lower-income individuals in Canada made almost 60 per cent of the claims but only received less than 50 per cent of the credit. This is partly explained by the fact that this credit is not refundable.

This means that many individuals who do not have personal income tax owing in a year will not receive the full amount.

The most recent federal budget announced the elimination of this credit, effective June 2017.

Instead of eliminating the credit, it should be made fully refundable. It might also be further adjusted so that lower-income riders, including those qualifying for an EquiPass, could earn a higher rate of credit.

To offset this extra cost, the federal government could lower the tax-credit rate earned by higher-income transit riders.

The net result would be that the existing federal credit would become better targeted to those who really need assistance.

Apparently the province of Ontario will be introducing its own new transit tax credit but we have to wait until April 27 to learn the details.

The new provincial credit will apparently be restricted to seniors and could be income-tested as well? Will it be refundable? Bill Toms, Nepean