It may seem ironic for the Canadian Taxpayers Federation (CTF) to advocate for payment of a federal tax in 2021.
But the federation says it is essential for the federal government to collect the taxation owed for the many financial subsidies handed out by Ottawa this year to alleviate the economic impact of the COVID-19 pandemic.
British Columbians have benefited from those programs, most notably the Canada Employment Response Benefit (CERB) of $2,000 a month, however the money received is taxable unless it is repayed.
Kris Sims, B.C. director for the CTF, said she hopes people are putting some of that money aside to account for tax payments come next year.
“Right now that money is coming to you raw, no tax is coming off it. The government will be coming for that next year,” Sims said.
“Our hope that people are being prudent right now and setting some of that money aside to pay the tax.”
READ MORE: COVID-19: BC sales, carbon tax payments must be paid by Sept. 30
While it was stated any COVID-19 pandemic assistance would be taxable, Sims still feels the federal government didn’t do enough to stress that point, or to stress applying for the money only if you really need it.
“We are talking about billions here and the federal government is in no position financially to not collect those taxes next year. There might be ways to soften the blow – deferred payment over a period of time perhaps – but frankly we can’t afford to forgive those taxes.
“In B.C., the province is facing a $12.8 billion deficit this year so there is a lot of work ahead to climb out of a hole.”
Sims said it gave pause for concern to see people with the opportunity to return to work deciding instead to stay at home and collect CERB.
“People would have been better off to return to work where that opportunity existed instead of choosing to have a CERB summer because the taxation could be a financial blow come next year,” she said.
“But you can’t blame people for having to collect it because COVID-19 is not their fault. It would have been a bit more prudent for the government to plan for rainy day, but the rainy day came and we were not ready for it.”
Sims said poor taxpayer dollar spending choices have left the federal Liberals with little room to maneuver when confronted by an escalating debt.
She suggests benefit recipients see a financial advisor to best understand how to off-set any pending tax hit, or utilize the online tax calculation tool provided by the Canada Revenue Agency.
The CTF earlier this month also commended the province hitting the pause button on three different tax hits: BC Carbon Tax hike from eight to 10 cents a litre delayed until April 2021, Employer Health Tax payment delayed until Dec. 31, 2020; and the beverage Pop Tax and Netflix Tax delayed until April 2021.
READ MORE: B.C. deficit forecast $12.8 billion after first three months of COVID-19
