Stephen Harper is kicking off the 2011 campaign battle for the middle class vote with a $2.5-billion tax break pledge aimed at parents of children under 18.
But there's a huge catch to this: It wouldn't take effect until the deficit is eliminated – a date that could be four years in the future.
The measure would allow parents to split, or share, up to $50,000 of their household income for tax purposes. The Conservatives estimate this promise would provide tax relief for almost 1.8 million families who would save on average $1,300 per year.
“We understand that family budgets are stretched and by making the tax system fairer for families, we will make it easier for parents to cover the day-to-day cost of raising their kids,” Mr. Harper said.
The Conservative Leader unveiled his “Family Tax Cut” pledge in the Victoria-area riding of Esquimalt-Juan de Fuca Monday morning. It’s the seat formerly held by Liberal MP Keith Martin, who is quitting federal politics and was previously elected in the riding under the Reform and Canadian Alliance banners before crossing the floor to the Grits.
Liberal Leader Michael Ignatieff immediately heaped scorn on the Tory idea.
“It’s like you come to a family and say, ‘I’ve got good news. First, I’m going to cut taxes for the biggest and most profitable corporations in the country and then maybe in five years, if you take a ticket and you’re patient and you vote for us a couple of times, and we’ll do something really great for you,’” Mr. Ignatieff said in Toronto.
“Is that credible? It’s just not credible.”
NDP Leader Jack Layton struck similar tone, telling reporters during a campaign stop in Regina that the Conservative income-splitting plan asks Canadian families to wait for relief.
“As I understand it, this will come into force some time in the future, possibly, if certain conditions are met. A lot of these kids who are 16, 17, 8 now are going to be grown up by then. Our families here in Canada need help right now,” Mr. Layton said.
Mr. Harper “thinks that people can wait on a wing and prayer, that maybe they will get some help some day,” he said.
“We believe that help is needed now. That’s why I met with the Prime Minister I said 'let’s take the federal tax off home heating right now to give families a break. Let’s immediately move every senior out of poverty.' He rejected our suggestions.”
The promised Conservative measure is a form of income splitting, a policy the Conservatives have long favoured but held off enacting because it can be expensive depending on how it's implemented. The Tories introduced pension-income splitting for seniors in 2007.
Income splitting allows the spouse in higher tax bracket to shift income to their partner with a lower level of earnings so that the overall rate of taxation is reduced.
But this version has the potential to be divisive. Writing Monday on The Globe’s Economy Lab blog, Carleton University professor Frances Wooley said the policy risks triggering a “Mommy War.”
“People sometimes think ‘the work done by parents who stay home looking after their children is valuable, therefore those people deserve a tax break.’ They’re already getting an enormous tax break. They’re getting thousands of dollars worth of in-kind income – the value of the work that is being in the home – and not being taxed on it,” the professor writes.
“Mommy Wars, that pit at-home mothers against working mothers, women against women, are bitter and destructive,” she adds. “If we want to support families with children, then we can just introduce tax measures that support families with children, for example, an enhanced child tax amount. It’s that simple.”
Under the Conservative proposal, a working spouse could transfer income for tax reporting purposes to a stay-at-home partner in a lower tax bracket.
