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Another interesting scheme is theintroduction of an income test on the age credit, which used to be available toall seniors who owe income tax, in 1994. Since that time the full age credit isnow available only to elderly taxfilers with net incomes under $ 26,284, whileseniors with net incomes over $ 49,824 do not qualify for any age credit.
The following is a brief outline of Canadianlessons in the sphere of social policy, which are of interest to Russia.
First lesson is the integration of the systemof social benefits. The Canada’s social protection system employs a much more modest set ofprograms as compared to the Russian one. The Canadian federal government hasjurisdiction only over eight programs: old age security, the guaranteed incomesupplement, employment insurance, the Canada pension plan, the child benefitsprogram, programs of aid to veterans and native peoples of Canadian North.
Even if the system of social protection iscompact, there is an apparent trend to its further internal integration along,at least, two lines: first, the provision of a package of related socialservices in the framework of one program (for instance, the Canadian PensionPlan provides a package of retirement, survivor, disability,children’s and deathbenefits). Second, programs of social assistance merge and increase in scope.
The most illustrative example of this processis the development of the system of child benefits. Three previouslyindependent programs with peculiar objectives and designs (family allowances,refundable and nonrefundable child tax credits) merged in the framework of auniform income-tested program of child benefits. At the same time, there is anapparent trend towards the merger of individual federal and provincial paymentsallocated for these purposes in the framework of phased replacement ofneeds-tested provincial programs with a uniform income-tested federal program.
Therefore, the Canadian experience is anevidence of the desire to create a more compact (including less components),but more integral (with a rather complex internal structure) system of socialprotection based on the income-testing of recipient households.
Second lesson is the choice of eligibilitycriteria. At present Russia’s social policy is based on a mixed two-criteria system ofdetermining the eligibility for social assistance: category- and needs-testingof assistance recipients. A similar situation exists in Canada. However, Canadaseeks to deliver the bulk of income security benefits to households on anincome-tested basis.
The difference between two our countriesdirectly affecting not only effectiveness, but the very capacity to use theincome criterion within the system of social policy is the level of developmentof the tax system. In the situation, where a full-fledged tax system disposingof reliable information on real household incomes in Russia is in the processof emergence, the only possible regime permitting to employ income indicatorsin social policy is the use of income declaration procedure, which isexpensive, complicated and requires special information support. Only in casethe declaration of incomes for taxation purposes is at least to a certainextent automatically employed for provision of social benefits anincome-testing system may work efficiently and effectively. For instance, inCanada the provision of child benefits is practically automatically triggeredby tax declaration showing that the citizen’s income makes her or himeligible.
There is yet another danger.Russia’s householdincome-tested social assistance programs may deteriorate into demogrants– category-basedpayments employing as the eligibility criteria not social and demographic (allfamilies with children, all pensioners, etc.), but income indicators (all poorcitizens). This may occur due to obvious factors – a considerable stratification ofthe Russian society and a substantial size of low-income population groups.
Due to these factors at the stage oftransition Russia will probably have to resort to needs-tested eligibilitycriteria within its system of social policy, although systems built on thesecriteria are non-efficient.
Third lesson is the choice of the type ofbenefit. As it was noted above, the paradigm of Canadian social policy has beendeveloping from the eligibility principles based on category and needs-testingtowards income-tested programs. However, it does not mean that this process isrooted only in the desire to reduce the amount of funds allocated for therealization of social programs (up to 6.7 per cent of the Canada’s GDP in 1998 through 1999).
The provision of social benefits ultimatelyaimed to increase household income is never reduced to this purpose alone.Determining a household eligibility for the inclusion in the system of socialassistance decision-makers always take into account a system of certainindicators, for instance, the maintenance of normal income levels necessary toraise children. Therefore, the alleviation of poverty takes a form ofmoderating its negative social consequences for households. Exactly because ofthis neither federal, nor provincial governments in Canada have implementeduniversalist programs aimed to maintain income levels of low income groups(while in Russia the problem of putting in place a system of benefits for thepoor has recently been in the focus of public discussion).
The fourth lesson is the necessity tocoordinate the activities of governments at different levels for theimplementation of social policy. The Canadian experience reveals that theeffectiveness of social policy directly depends on this factor. Coordination isespecially important in case federal and local social assistance programs arenot integrated into a single system. Seeking to promote a balanced cooperationbetween authorities, since 1970s the Canada’s government has been mainlyemploying three tools:
- Delegation of some tax collection authority to the level ofprovincial governments, what permitted to form a stable financial basis forregional social programs;
- Use of the system of social transfers and equalization paymentsmoderating differences between rich and poor regions and aiding regionalauthorities to implement social payment programs;
- Concentration of the most cost-extensive social program– child benefits– at the federallevel, thus making it easier for provinces to reassign funds made available dueto the transfer of functions associated with this programs to the higher levelof government.
The fifth lesson refers to social reforms andpublic participation. The current Canadian social policy is graduallytransiting from formalized forms of discussion of its aims and objectives (viavarious commissions, committees, working groups, etc.) to the real-timecooperation with non-governmental actors. Partnership is the slogan of the day.It is obvious that there is no other way to create a broad context for thediscussion of urgent social problems and means to settle them.
These conclusions outline the state of thecontemporary Canadian social policy and some of its mechanisms, that may beapplied in Russia’ssocial practices.
1 BySeptember 1999, the average subsistence minimum in Komi Republic exceeded 900Rubles, however, the budgetary capacity of the region did not allow to raisethe level of GPI, and it remained at 230 Rubles.
2 It shall be noted that practically no such typology can be foundin the Russian literature on social and economic issues, although it seems tobe useful to render the set of concepts more consistent.
3However, it may be noted that Canada’s social insurance programs areuniversal in the sense that the income is taken into account implicitly (ascontributions made to insurance financial institutions).
4 They include the new Canada Child Tax Benefit, the trio offederal benefits for seniors (Old Age Security, the Guaranteed IncomeSupplement and the Spouse’s Allowance) and the refundable Goods and Services Tax credit.
5 The liquid and fixed assets, and potential sources of income areassessed against household basic requirements and special needs.
6 However, the list is impressive: social housing programsimplemented both at the federal and provincial levels of government; universalhealth care (‘medicare’); loans for postsecondary students, broad use of “taxexpenditures” within the income tax system as a tool to ensure income security,etc.
7 It is planned to reach about $ 4,200 maximum per child annuallywithin the first decade of the 21st century. That amount is a rough estimate of the annual costof raising a child in a low-income family.
8 There was introduced a rule intended to reduce the repeatreliance on Employment Insurance: recipients face a penalty of a one percentagepoint reduction in their benefit replacement rate after each 20 weeks ofbenefits, reducing the rate from 55 percent to as low as 50 percent.
9 This change represents an increase of between 180 and 300 hoursover the former entrance requirement.
10 Naturally, pensioners with incomes too low to owe income tax donot benefit from these two tax breaks.
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