PEI

Increase to P.E.I.'s personal tax exemption good for low-wage workers, CFIB says

P.E.I.'s basic personal amount tax exemption will increase by $1,000 over the next two years, leaving about 2,200 more Islanders no longer paying any provincial income tax, the province says.

About 2,200 more Islanders will no longer pay any provincial income tax, province says

The P.E.I. government is increasing the basic personal tax exemption as part of the 2018-19 budget. (The Canadian Press)

P.E.I.'s basic personal amount tax exemption will increase by $1,000 over the next two years, leaving about 2,200 more Islanders no longer paying any provincial income tax, the province says.

The increase to the tax exemption was announced Friday during the unveiling of the 2018-19 provincial budget.

The basic personal amount is how much income you can have before you start paying taxes on it. In 2017, the amount went up to $8,160.

The provincial government says the move will keep more money in the pockets of Islanders.

"This is the first step toward regional tax parity over the next five years," read budget documents.

Among lowest in Canada

The amount for P.E.I. has been the lowest in Canada and will still be among the lowest even after this increase, depending on what other provinces do. Most Canadian jurisdictions have exemptions more than $10,000.

The Greater Charlottetown Area Chamber of Commerce is pleased to see the increase.

In the past, the chamber has advocated for this increase as a way to improve the situation for employees, particularly those in minimum wage jobs.

Executive director of the Greater Charlottetown Area Chamber of Commerce Penny Walsh McGuire says the chamber has advocated for this increase as a way to improve the situation for employees, particularly those in minimum wage jobs. (Nicole Williams/CBC)

"And also for government to share ... that reimbursement to people of their tax dollars so that it's not always on businesses through things like increases in the minimum wage," said chamber executive director, Penny Walsh-McGuire.

"I think that's a really good tool or a good method of helping all Islanders," Walsh-McGuire said.

The Canadian Federation of Independent Business said the change is good for basic tax fairness for Islanders.

"It's really about exempting people from paying taxes when they're in those lower-income thresholds," said Erin McGrath-Gaudet, director for P.E.I. with CFIB.

'Poverty-reduction measure'

She said the CFIB would like to see even more of an exemption for people because the value of the exemption has eroded as it's not automatically linked to inflation, while in some other provinces it is.

Erin McGrath-Gaudet of the Canadian Federation of Independent Business says increasing the basic personal tax exemption is good for minimum-wage workers. (Tom Steepe/CBC)

"It is proven to be an effective poverty-reduction measure," McGrath-Gaudet said.

The CFIB also said it was good to see a balanced budget, but there are some concerns with the sustainability of the significant increase to program spending in the 2018-19 budget.

The first increase of $500 to the basic personal amount is for the current taxation year and the further increase of $500 is effective Jan. 1, 2019.

Finance Minister Heath MacDonlad said the spouse and equivalent-to-spouse tax credit will also increase proportionately.

More P.E.I. News

now