What Happened to Poverty as an Election Issue?

As Mark Carney and Pierre Poilievre vie for votes, their promises to cut taxes for the middle class seem tailored to quell the anxieties of a middle class whose financial security is no longer a given. But the relief these pledges offer is not only momentary; it could further tatter the remains of our social safety net.

Ten years ago, Alex Rettie could have been a member of this election’s target audience. He was a married homeowner in Calgary whose stable income as a freelance instructional designer allowed him to comfortably support his family. Rettie had few concerns about earning enough to put food on the table, pay the mortgage or fill up the car’s gas tank.

Everything changed when Rettie and his partner separated in 2015.

“I used up my savings both during the divorce and in bad spells after,” Rettie said. “It was bad timing.”

His divorce was followed by a series of setbacks: an oil crash, a recession and a global pandemic.

Caught in a downward spiral, Rettie didn’t get a respite until last month, when his income dropped so low that he finally qualified to apply for income support. Starting March 20, Rettie is set to receive $842 each month as long as his freelancing income remains below that amount.

To get by, he’s begun taking the bus to the Calgary Food Bank to gather the single hamper of food he is allotted every three weeks. Demand is high, so the organization is asking Calgarians to book their hamper pickup 21 days in advance.

Like Rettie, a growing number of Canadians experiencing food insecurity are single, working-age adults, whose stagnant wages, even if complemented by income supports, no longer cover basic necessities. Last year Food Banks Canada estimated that about one in four Canadians lives so close to the edge they can’t afford an unexpected $500 expense.

Despite the growing number of Canadians struggling to make enough money to feed, clothe and house themselves, the word “poverty” has seldom been uttered on the campaign trail.

The Liberals and Conservatives seem set not on winning over folks like Rettie, but on securing the vote of Canada’s perceived majority: the middle class.

Tax cuts as anxiety medicine

Faced with a social safety net in rags, middle-class Canadians have become an anxious crowd.

As the cost of food, utilities, transportation and housing rises, many are tightening their belts and cancelling their streaming subscriptions, eating out less often or taking on debt to make ends meet at the end of the month.

Others are delaying important milestones, like becoming parents or retiring.

To capitalize on these woes, political parties left and right have shifted their narrative away from addressing poverty, as they did up until 2015, and towards preventing middle-class Canadians from losing their status. A reasonably safe bet, considering that more than 40 per cent of Canadians identify as middle-class, regardless of their income.

The day after Rettie picked up his first food hamper, Prime Minister Mark Carney launched his campaign with a “middle-class tax cut” that intends to drop the tax rate for the lowest income tax bracket by one per cent. It didn’t take long for Conservative Leader Pierre Poilievre to pledge a more sizable cut, suggesting income taxes are akin to a fine for hard-working Canadians.

“Every single Canadian who pays income tax will pay less,” Poilievre said during a campaign event in Ontario. “We will ensure that this money goes right into people’s pockets so that they can make the decisions.”

Dropping tax rates, however, won’t benefit everyone. Not even all those who consider themselves to be middle-class.

In fact, defining who belongs to the middle class is an increasingly blurry proposition. Particularly when the ultimate symbol of middle-class success, home ownership, is a largely unattainable dream for young Canadians.

In Calgary, earning an annual $28,954 should be enough for a single resident to cover the cost of shelter, food, utilities and transportation, according to the city’s market basket measure. But grossing about $30,000 in 2024 didn’t protect Rettie from the challenges posed by an increasingly precarious labour market.

Because income supports are programs of last resort, applicants must prove they are in dire need before qualifying for social assistance. In Rettie’s case, that meant having his monthly income hit rock bottom and losing the rental home he’d lived in since 2017, before he qualified to receive any help.

“I found something with a friend, which kind of works out well,” he said. “I cut my housing expenses by 60 per cent, but I’m still anxious about finding income.”

Who loses when taxes are cut?

One of the reasons why income support is a targeted benefit, rather than a universal one, is that there simply isn’t enough money to go around. The tax cuts pledged by the leading parties on the federal campaign trail could make a bad situation worse for lower-income Canadians.

“The way we fund our programs and social services is through taxation,” explains Tracy Smith-Carrier, a professor of humanitarian studies at Royal Roads University. “If you don’t have tax revenues, you’re not going to have a robust social welfare system, which is quite dangerous right now.”

For Canadians whose income falls below $31,000, an amount precariously close to the poverty line, the average annual benefit of the proposed tax rate cuts could range between $7 and $59, a negligible amount relative to the $900 promised by the Conservatives and the $825 touted by the Liberals.

Worse, the cost of these tax cuts could further undermine the social safety net that is keeping 3.8 million Canadians afloat.

“People in the deepest income poverty are not going to feel any effects from these tax cuts,” said Smith-Carrier. “In fact, it’ll reduce the value of their tax credits and ensure there’s less money to attend to other important things like housing, transportation and income supports.

“We really need to be using tax revenue to support society, and not to allow wealthy people to amass the benefits of paying less taxes.”

According to an analysis carried out by David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, if the Liberals win a majority of seats on April 28, the loss in tax revenue could reach $5.4 billion.

The Conservative proposal could make an even larger dent in the federal coffers, as its implementation could result in $12.2 billion less in revenue. For context, the new Canada Disability Benefit is expected to cost Canadians $6.1 billion over six years.

“This is a tremendous amount of money to give people at the high end of the income spectrum a couple hundred bucks, and the folks at the low end nothing,” Macdonald told The Tyee.

For low-income Canadians, cash transfers like old age security and the Canada Child Benefit are a lifeline, but what happens when there’s less tax revenue to redistribute?

“Money comes in through taxes and it’s spent on services. That’s how the government works,” Macdonald said. “So if you cut the revenue side, you end up cutting the expenditure side.”

Over the weekend, the Office of the Parliamentary Budget Officer released an estimate of the cost of the Liberal pledge, which would surpass $28 billion by 2030. The Conservatives have yet to release their costed platform, but the loss of tax revenue should be even more substantial.

European vs. US models

Broadly defined, redistribution is the process governments use to prevent a handful of market players from accumulating large shares of capital. Excess revenue is typically collected via taxes and distributed to the rest of society via cash transfers and social programs. In other words, redistribution is how wealth at the top “trickles down” to the rest of us.

How middle classes perceive their position in society plays a key role in establishing the direction of distribution policies. The growing disparity between moderate- and high-income Canadians shows an affinity for measures that benefit the upper class, and the pledges made by the leading parties reflect this.

“In advanced democracies in which the middle class sees its interests as associated with others in the bottom half of the distribution, they tend to vote in favour of left policies,” said Keith Banting, a professor emeritus at Queen’s University’s school of policy studies. “But in countries where the middle class sees its interests as aligned more with higher-income groups, they will join the clamour for tax cuts.”

In countries like Denmark, Sweden, Norway and Germany, organized labour has helped bolster redistribution policies that support the bottom half of the population, regardless of the political leaning of the party in power. But for Canadians, few of whom identify as working-class, redistribution can be a touchy subject.

Although many self-ascribed members of the middle class support the strengthening of our social safety net, they don’t necessarily want to pay for it.

“People in the professional end of the middle class don’t mobilize against universal child care,” Banting said. “But they do mobilize against tax policies that directly affect them; we see this in the capital gains exemption.”

Twelve days after taking the country’s helm, Carney cancelled a capital gains tax introduced in last year’s budget to address inequality. This tax, targeted at older, wealthier Canadians, was expected to generate $21.9 billion in revenue over the course of five years. According to the Parliamentary Budget Office, the blow amounts to $17 billion.

“Canadians would like to have European social policies and American taxation policies,” Banting said. “But that doesn’t work.”

‘Everyone taken care of’ in tariff wartime

Canada’s increasingly regressive tax system has eroded the capacity of the federal government to adequately fund the universal programs that once helped lower-income Canadians keep their heads above water. But as social supports increasingly target specific populations only, our country’s safety net is set to benefit only those whose financial conditions have already reached a critical point — leaving a downwardly mobile middle class worried and unprotected.

While personal savings have become our de facto safety net, more than 50 per cent of Canadians are already dipping into their savings. Increasingly, those who have depleted their savings fall into poverty before they can qualify for social supports.

By contrast, a growing disposable income allows affluent Canadians to top up their savings accounts — yet marginal tax rates at the top income brackets remain untouched.

This is meeting resistance from organized labour.

To reduce income inequality and ensure all Canadians can put food on their table every day of the week, members of the Canadian Labour Congress, which represents about three million workers across Canada, are calling for improved redistribution policies that raise tax rates on corporate income, capital gains and windfall profits.

“Right now, what we need is to make sure that everyone is taken care of,” said Bea Bruske, president of the Canadian Labour Congress. “When we are in the middle of a tariff war with the United States, when people need to rely on our social safety net and when we need more programs to actually lift people up — we think cutting taxes is going in the wrong direction.”

So far, only the NDP has promised to tax Canada’s wealthiest by restoring the capital gains tax Carney slashed in March. Carney explained the tax cut would bolster private investment and innovation, two essential drivers of economic growth.

But four decades of sustained economic growth have not kept Canadians like Rettie from falling into poverty.

“There might be some truth to the quote that a rising tide lifts all boats, but economic growth always leaves people out,” Rettie said. “It seems that, since I was a kid, the proportion of people it leaves out is getting larger and larger.”

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