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Two-year-old Fiona Wellburn plays as Conservative leader and Canada's Prime Minister Stephen Harper makes an announcement during a campaign stop at the Wellburn family home in Saanich, British Columbia March 28, 2011. (CHRIS WATTIE/REUTERS)
Two-year-old Fiona Wellburn plays as Conservative leader and Canada's Prime Minister Stephen Harper makes an announcement during a campaign stop at the Wellburn family home in Saanich, British Columbia March 28, 2011. (CHRIS WATTIE/REUTERS)

Globe Editorial

A tax credit that may be worth the wait Add to ...

The "Family Tax Cut," a major new Conservative commitment announced this morning by Stephen Harper, is good policy. But as an election incentive, voters should view it with some skepticism.

The idea addresses a howling inequity in the tax system, whereby a couple in which one spouse earns more than the other pays more tax than a couple in which the spouses earn equal amounts (even if the total amount earned by each couple is the same). A move to allow up to $50,000 of income to be shared by a couple filing federal income-tax returns could, in particular, make life easier for stay-at-home parents or those caring for sick relatives.

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The fact that the credit would be delayed until the budget is balanced, shows that the Conservatives are, moreover, being fiscally responsible. The credit will cost $2.5-billion annually; Mr. Harper will, to his credit, not deviate from his pre-election plan as the path toward a balanced budget.

But with balance only projected to take place in 2015-16, the promise becomes less meaningful. No government, even a new Conservative government, would feel bound by this promise. If the next government lasts four years, the promise would be slated to be implemented in April, 2015; exactly when the country would again go to the polls.

Moreover, will this specific tax cut be the one that's most needed in 2015-16? Personal income-tax cuts are a proven path to economic growth. But by 2015-16, we may choose to spend the dividend of a federal budget surplus differently. Canada's continued inability to innovate economically, and the threats to publicly funded health care, are long-term challenges. And on the personal tax side, Employment Insurance premiums are rising, and will continue (in the absence of a reform of the EI system) to do so for the foreseeable future - something that is more urgent to address and reverse.

It is commendable for governments and political parties to lay out a long-term vision, and Mr. Harper has consistently focused on putting more money back in the pockets of families. But this election is about this coming mandate, not the one after that.

 

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