FAMILY POLICY by John BallantyneNews Weekly
Canada introduces income-splitting for families
, November 22, 2014
Canadian single-income two-parent families with dependent children will be better off after a multi-billion dollar package of tax breaks and increased child benefits was announced last month by the Conservative government of Stephen Harper.
Canadian Prime Minister
Parents with children younger than 18 can now split their incomes for tax purposes up to a certain limit. A so-called “Family Tax Cut” will allow a taxpayer to transfer up to $50,000 of income to his spouse for tax purposes in order to receive tax relief up to an annual limit of $2,000 per family. (The Canadian dollar is presently almost exactly the same value as the Australian dollar, give or take a cent).
The Harper government has simultaneously expanded the Universal Child Care Benefit (UCCB), a payment which does not discriminate against home-based parental child care. The UCCB will rise from $100 to $160 per month per child under the age of six. In addition, the government is providing a new monthly benefit of $60 for children aged six through 17.
The Prime Minister, Mr Harper, in announcing his government’s pro-family package, said: “This is a difference between our philosophy and the others. We have always been clear that money and support to help families raise children should not go into more bureaucracy. It should go to the real experts on child care. That’s mom and dad, and that is what we are doing.”
Gwendolyn Landolt, national vice-president of REAL Women of Canada, a pro-family conservative women’s movement (REAL stands for Realistic, Equal, Active, for Life), has welcomed the changes.
In a media statement on October 30, she said: “Prime Minister Stephen Harper’s announcement today of his government’s tax policies for families, is great news for families struggling to raise their children in these difficult economic times. It is also an acknowledgement of the importance of the family.
“The policy on income-splitting now means that a spouse is able to transfer income for tax purposes up to $50,000 to the lower-income spouse with children 18 years and younger, in order to collect a non-refundable tax credit of up to $2,000 per year. This break means that it is the middle and lower-income families, not the higher income families, who will benefit from this ‘Family Tax Cut’.
“Family income-splitting is a legitimate form of tax sharing, and is a welcomed remedy for the disparity in taxes paid by sole and dual family income earners with the same income. This blatant discrimination has now at last been remedied.”
The Harper government’s pro-family measures, although largely popular with Canadian voters, have attracted the predictable torrent of hostile criticism from feminists and other left-wing commentators.
Kathleen Lahey, professor of tax law at Queen’s University faculty of law, in Kingston, Ontario, had this to say: “The Harper government’s parental income-splitting plan is designed in such a way that guarantees it will only make a difference to the richest Canadians. By design, it cannot help those who need assistance with child care the most” (Toronto Globe and Mail, October 30, 2014).
Her criticism, however, was relatively restrained compared to that of Martin Regg Cohn, a columnist with the Toronto Star.
“It’s not merely unfair, but unaffordable,” he protested. “Income-splitting is perhaps the most indefensible and insidious campaign gimmick ever conjured up by Prime Minister Stephen Harper” (The Star, October 29, 2014).
Another columnist for the same paper is Canadian feminist Heather Mallick, who scoffed at the Harper family package.
“The Conservatives’ income-splitting plan … replaces the vision of national child care with a hasty pre-election vote-buying cheque,” she wrote. “There is little about this boutique tax break for a small group of families that offers realistic help” (The Star, November 4, 2014).
Andrew Coyne, columnist for the conservative Canadian National Post, has defended the Harper plan against charges that it is inequitable and favours the very rich. He said that the package, unlike the opposition parties’ alternative of directing more money into institutionalised childcare, “removes an unfair preference: between two-income and one-income families”.
He went on to say: “This is a point that seems to elude the critics. Income-splitting isn’t some sort of special tax break for one-income families. It merely puts them on the same footing as two-income families.”
Furthermore, he added, “the plan doesn’t, as charged, give women an ‘incentive’ to stay at home: it just doesn’t penalise them for doing so”.
“The ‘costs’ of income-splitting are simply the extra taxes currently being unfairly collected from one-income families” (National Post, October 31, 2014).
He invited Harper critics to consider an alternative scenario: “Let’s try a thought experiment. Suppose, rather than being skewed in favour of two-income households, the tax system had the reverse defect.
“Suppose it, in effect, penalised women for working outside the home, to the tune of thousands of dollars, in the same way that it now penalises them for staying at home. I suspect that inequity would top the priority list in a hurry” (National Post, November 5, 2014).
John Ballantyne, “Coalition must restore the baby bonus”, News Weekly (Australia), November 10, 2012.
John Ballantyne, “Should parents or paid strangers raise children?”, News Weekly, May 10, 2014.
Luke McCormack, “High time to introduce family-friendly taxation”, News Weekly, September 27, 2014.
Gwendolyn Landolt, “Welcomed tax relief for Canadian families”, media release of REAL Women of Canada, October 30, 2014.
Andrew Coyne, “As a work around to a true flat-tax system, you could do worse than Harper’s income-splitting benefit”, National Post, October 31, 2014.
Andrew Coyne, “Conservatives’ tax package with income-splitting corrects inequality”, National Post, November 5, 2014.