How Ottawa Could Get an Extra $72 Million a Year from the Feds and Province

Ottawa Mayor Mark Sutcliffe says affordability for residents is his top priority. Will he put his money where his mouth is?

Welcome to new readers, who have joined us through the Lansdowne referendum petition. We’re now over 4,000 signatories to the petition.

You’ll remember Sutcliffe’s “Fairness for Ottawa” campaign calling for more support from higher levels of government.

I spoke at the Community Services Committee of City Council about how to get more money out of the federal and provincial governments.

I spoke in support of a proposal put forward by the Coalition of Community Health and Resource Centres of Ottawa to invest in community tax clinics. That proposal is to provide $3 million in City support to these clinics in order to put $72 million of federal and provincial money into the pockets of Ottawa residents.

(Full disclosure: I am a board member of the Centretown Community Health Centre.)

Affordability is more than just taxes

Mark has said that affordability for residents is his top priority.

The 2025 Ottawa City Budget is around the corner. On November 13, we’ll get a first glimpse of next year’s budget, which will be approved on December 11.

For Mark, that means keeping municipal taxes as low as possible.

But what if a little spending by the City could put a lot of money into the pockets of residents? That could have a much bigger impact on affordability.

Leaving money on the table

It turns out there is money sitting on the table, waiting to be claimed.

There are a number of federal and provincial benefits available to Canadians, but if you don’t file a tax return, you can’t access them.

Some of these benefits are available to all of us. Some are only available to low-income Canadians.

The proposal from the Coalition of Community Health and Resource Centres is for the City to systematically help more low-income residents file their taxes, in order to access the benefits to which they are entitled.

About 1 in 10 people in Ottawa live in poverty. I’d estimate that a quarter of low-income residents don’t file income tax returns.

There are a lot of reasons people don’t file their returns.

Maybe they are unaware of the available benefits.

Maybe filing is too much of a hassle.

Maybe there’s a language barrier.

But if those people did file, they could take a lot of that federal and provincial money off the table.

Community tax clinics

Which is where community tax clinics come in.

The Ottawa community health and resource centres see a lot of people living in poverty coming through their doors. People for whom even a few hundred extra dollars can be life-changing.

Accordingly, the centres, along with other organizations, run community tax clinics that use volunteers to help low-income residents file their income tax return.

The challenge with these tax clinics is that demand far exceeds supply. Clinics rely on volunteers, who typically spends about 30 minutes working on each return. There are simply not enough skilled volunteers to meet the demand for help.

Complex care needs

And even if there were enough skilled volunteers, the work involved in helping an individual with complex needs turns into more than 30 minutes.

The experience of the health centres is that for individuals with complex needs, case workers should plan for about an additional 150 minutes helping those individuals get their paperwork in order and manage any follow-ups.

Proposal from the health centres

Which brings us to the proposal put forward by the coalition of community health centres. The coalition is asking the City of Ottawa for $3 million to scale up these existing tax clinics.

The community tax clinic model works. It’s been proven across the country.

But the health and resource centres in Ottawa are turning away more people than they can help. The demand is there. The supply is not.

Scaling up tax clinics means making clinics available year round. This is critical as proof of income is required throughout the year.

Scaling up clinics also means supporting the expert volunteers with the case workers required to navigate complex clients through the process. It also means providing robust training programs that ensure a strong supply of skilled community volunteer tax filers.

The health centres estimate that they could help up to 13,500 individuals annually file their taxes. In 2023, the centres maxed out at helping 2,000 people through their tax clinics.

Supporting up to 13,500 individuals could put $72 million into the pockets of low-income residents and into the local economy.

That’s a big number. What does that mean for each person?

$5,350 per person per year

The benefits available to those individuals who get support with their taxes are significant. I put together the following table with the help of one community volunteer, based upon the real world experience of the Ottawa centres and drawing upon Canada Revenue Agency reporting.

This table outlines the major support programs someone can access only if they file their income tax form.

In 2023, the Ottawa health and resource centres’ income tax clinics resulted in individuals accessing, on average, about $5,350 in annual federal and provincial benefits that they were not previously receiving. For anyone living at or below the poverty line, that amount can be life-changing.

For seniors or families with children, the benefits are considerably higher.

H&R Block?

H&R Block and other commercial services can help people file taxes, typically for about $90.

But commercial services are trying to process each client as quickly as possible. Community tax clinic volunteers who have reviewed the submissions by commercial services have found them to be rushed and incomplete, with those volunteers often forced to resubmit to correct errors.

Furthermore, commercial services can only file if you have the required documents at your fingertips. For a complex client requiring help to assemble documents, those commercial services have nothing to offer.

Finally, commercial tax services are financial institutions serving low-income and vulnerable populations. Their incentive is to steer people towards quick-turnaround but high-cost solutions, similar to the payday loans industry.

Why are the feds and province not paying for this?

The federal and provincial governments should be supporting voluntary tax clinics.

But mostly, they are not. The federal government has piloted support to free tax clinics for four years now, but the payouts to organizations (as little as $5 per return) barely keep the lights on.

The federal government could solve this issue by moving to automatic tax filing, as other countries do. Canada has been experimenting with automated tax filings for low-income Canadians, but recognizes that its current solution is working poorly. And given entrenched resistance from the tax filing industry, the landscape is probably not going to change anytime soon.

Cities left to clean up

Cities can complain about the injustice. Or cities, who are on the front line of dealing with the resulting poverty, can do something about it.

In fact, helping people access their benefits through the income tax system may be in the best financial interests of cities.

Consider the example of subsidized housing. Many affordable housing providers require tenants to show proof of income to receive a housing subsidy. Last year, 580 people lost their housing subsidy with Ottawa Community Housing simply because they could not show proof of income. How many of those 580 ended up in a shelter or motel, costing taxpayers about $3,000 a month per person per bed?

Federal and provincial support is available to help individuals and families reduce the impact of poverty. But if that support doesn’t reach its intended beneficiaries, cities may find it in their best financial interest to support tax clinics that proactively help residents access those benefits.

Turn $3 million into $72 million

I have spent a lifetime in public finance and have looked at many spending proposals during my time at the Department of Finance Canada. A proposal this good, with such a high return on investment, is something that you rarely see.

This proposal would allow the City of Ottawa to turn $3 million into $72 million.

Mark says affordability for residents is his top priority. So will he jump on this opportunity?