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    Poverty Cut-offs in Canada

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    I am doing a paper on poverty trends in Canada. I have a question: What does the Canadian government use as a standard of measure to determine who lives below the poverty line? Thanks.

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    Solution Preview

    The following information, contained in "FACT SHEET: DEFINITIONS OF THE MOST COMMON POVERTY LINES USED IN CANADA - June 2003," seems to answer your question:

    1. Low-Income Cut Offs (LICO)

    Statistics Canada's Low Income Cut Offs define a low-income household as one which spends a disproportionate amount of its income on the necessities of life - food, shelter, and clothing. Statistics Canada has decided over the years - somewhat arbitrarily - that 20 percentage points is a reasonable measure of the additional burden.

    LICOs vary by the size of the family unit and the population of the area of residence. There are seven categories of family size, from one person to seven or more persons, and five community sizes ranging from rural areas to cities with 500,000 or more residents. The result is a set of 35 cut-offs. The cut-offs are updated annually by Statistics Canada using the Consumer Price Index.

    LICO is based on income after government transfer payments such as the Canada Child Tax Benefit, Old Age Security pension, GST Credit, Employment Insurance benefits and provincial of territorial welfare payments but before federal, provincial or territorial income taxes are deducted.

    2. Pre-tax and Post-tax Low-Income Cut Offs

    LICOs can be ...

    Solution Summary

    This solution discusses what the Canadian government uses as a standard of measure to determine who lives below the poverty line. Supplemented with three links for further research.