Budget ‘goodies’ not for everyone
Anticipated tax breaks would do little for average family
Pearl Almeida doesn’t expect Tuesday’s federal budget will make much difference to her family’s financial situation, even if it does contain some extra “goodies” that help reduce their tax bite.
With a hefty mortgage, two young children and monthly daycare costs, Almeida and her husband, Chris Senchak, say it’s going to remain tough to get by in a high-cost city on modest incomes.
“We live in one of the most expensive cities in the world,” Senchak, 40, said in their semi-detached home in Scarborough.
“I’m not saying we’re not comfortable,” adds Almeida, 38, as she pulls up in their minivan. “But it would be nice to be able to keep a little bit more. We’re constantly worried.”
On paper, the family’s combined income meets the definition of “middle-class.” Statistics Canada defined median income — half earn more, half less — as $74,890 for a family in Ontario in 2012.
But they don’t feel like they lead a middle-class life.
The Harper government has said the focus of its budget will be hardworking families. And with an election on the horizon, the document is expected to be chock full of votegetting tax breaks, including income splitting and increased caps on retirement savings.
Almeida works in customer service in a federally regulated industry and earns about twice what her husband makes. So, the family could benefit from the income-splitting program the government announced last fall.
The program, announced last fall, allows higher income earners to split some of their income with the lower earner, potentially decreasing their overall tax bill. The benefit is capped at $2,000 a year.
Abigger impact on their living standard would come from a hike in the provincial minimum wage, Senchak says. But that’s not something that will be in the federal budget.
Minimum wage in Ontario is currently $11 an hour and has been rising. But it’s a long way from the $15an-hour level most poverty activists say it needs to be.
The family also benefits from the existing children’s fitness tax credit. The federal tax credit allows families to claim up to $500 in fees and save up to $75 in taxes. But it’s still not enough to equip their son, Aidan, 11, for hockey, Almeida said. In a classic catch-22 situation, Senchak said he looked into applying for a grant from a sports-oriented corporate foundation, but learned their combined household income was considered too high to qualify.
Almeida says they’re also worried about having enough to live on in retirement. One of her concerns is Ottawa’s plan to introduce changes to pension plans for federally regulated employers. The plan would shift more of the risk of future retirement benefits onto the employees.
Both Almeida and Senchak are heeding the government’s advice to boost their personal savings by contributing to registered retirement savings plans and tax-free savings accounts. But they’re unable to put in anywhere near the current maximums, so any increase in the limits will be of no help, they said.
“My parents always said make sure you have three months’ savings in the bank. We don’t have that. It’s almost like we’re living paycheque to paycheque,” Almeida said.
The family does what it can to cut costs, she said. When their youngest, Alexis, 5, was born, the couple opted to work opposite shifts to minimize their child-care expenses.
But like any hardworking family they also like to live a little, though a night out adds up, even if it’s just a movie and dinner at a casual family restaurant for the four of them, they noted.
“In terms of the federal budget, I don’t know what could help us,” Almeida says.
“I don’t think they’ll do anything that will benefit people in our income range,” her husband adds.