OTTAWA, February 14, 2014 (LifeSiteNews.com) – Finance Minister Jim Flaherty may not have been making rogue statements when he hinted Wednesday that the government may backtrack on its 2011 campaign promise to allow “income splitting” for families to save at tax time.
Prime Minister Stephen Harper said himself yesterday afternoon that Canadians will have to wait and see what kind of tax break families can expect once the budget is balanced next year.
“Once we have a balanced budget and once we get a surplus we can have obviously the discussion about what we do next,” Harper said while in Toronto, according to the Toronto Sun.
“We’re very clear that we made commitments, and reducing taxes for Canadian families will be among the highest priorities as we move forward.”
Andrea Mrozek, executive director of the Institute of Marriage and Family Canada, said the government should be held accountable to its promises.
“I’m very concerned when I hear them going back on their promise,” she told LifeSiteNews. “They did clearly say it in the 2011 election cycle that this was going to be introduced when they balanced the budget. It was their promise; they didn’t have to make that promise, but they did.”
The so-called “Family Tax Cut” promised in 2011 once the budget is balanced would allow couples with children under 18 to share up to $50,000 of their household income for federal tax purposes. Income splitting would save families money on their tax bill by allowing a high-earning spouse to drop to a lower tax bracket.
Gwen Landolt, national vice-president of REAL Women of Canada, told LifeSiteNews.com that whatever the government does, it has to solve the problem of “inequality and discrimination” against single-income families.
Under the current tax system, two families with the same household income can end up paying different tax amounts. For example, a family with parents earning $60,000 and $20,000 could pay almost $1,300 more in tax than where each spouse earns $40,000.
A family with one parent earning $70,000 and the other staying at home will pay almost $2,000 more than a family where each spouse earns $35,000.
University of Calgary economist Jack Mintz argued in a research paper last year that the existing tax system is unjust since it penalizes single-earner families.
Landolt said that the current system shepherds women into the “career choice” of the paid workforce since stay at home mothers receive no tax benefit.
“Women, however, are competent to make their own choices. It is their life, their career. It is not the role of the government by tax legislation to direct women’s career paths,” she said.
While Landolt stands behind income splitting as a way to solve the problem, she says there could be other ways.
“If the government can find some other way to address the problem, we’d be more than happy,” she said.
One criticism of income splitting from some economists is that it would benefit very few.
But Mrozek told LifeSiteNews that, properly implemented, income splitting could be made to help families in many different financial situations and circumstances, including single parent families.
She pointed to the example of France where a single parent can split his or her income with a child to decrease the taxable amount.
Vicki Gunn, executive director of the Christian Heritage Party, criticized the government for “making election promises without the intent or commitment to keep the promise.”
“Before the promise was offered to Canadians, the Conservatives should have researched the subject fully. They were the governing party so should have been fully aware of the long-term feasibility of their plan,” she told LifeSiteNews.com.
Gunn said that the current tax system penalizes “intact families” and that CHP Canada would, under the current tax structure, allow income splitting.
“Families are penalized for devoting the time of one parent to the care of their children. This is wrong.”
One pundit believes that Harper and Flaherty are leaning toward increasing the universal child care benefit as a better way to help Canadian families than income splitting.
“They are of the same mind — income splitting is dead and the $2.5-billion earmarked for the tax cut would be better spent extending the universal child care benefit that gives $100 a month to families with children under six,” wrote National Post columnist John Ivison.
Landolt said such a solution is not good enough.
“We’re glad, happy, thrilled if they do increase the benefit, because it is overall very beneficial,” she said. “But we still have the old problem of [the current] tax legislation which doesn’t give women the flexibility of choice as to what would be their career path.”