Stephen Harper revealed his income splitting plan last week. It's classical Conservative policy. Comfort the rich, they say, and everyone else will benefit. Scott Clark and Peter Devries write:
According to the Harper government, income-splitting will cost Ottawa $2.4 billion 2014-15 and $1.9 billion in 2015-16. That’s an awful lot of revenue to give up just to make a small group of well-heeled taxpayers happy. Why do these households deserve a deep tax break more than the vast majority of Canadian taxpayer? How can the government justify a re-distribution of income that benefits the wealthy?
There is no justification whatsoever for introducing income-splitting on social or economic grounds — certainly not in the current economic environment. The argument that the government makes — that it did it for seniors and therefore it should be applied to other families — doesn’t make a particle of sense. The fact is that the Harper government gave income-splitting to seniors to make amends for its decision to tax income trusts.
Income-splitting is being done to placate a small part of the Conservative base at the expense of virtually everyone else. The rollout will be explicitly political: those households that qualify will be able to collect their tax cut when they file their 2014 tax return, just in time for the election.
It’ll be interesting to see how this tax change plays out with Canadians as they come to understand what it means to them — or rather, what it doesn’t mean. The Harper government obviously is expecting people to be disappointed, which explains their decision to sugar the pill with other tax breaks:
Mr. Harper announced an enrichment of the Universal Child Care Benefit (UCCB), which would benefit almost 1.7 million families with children. First, the monthly benefit for a child under age six will be increased from $100 to $160. Second, under the UCCB, children aged between 6 and 17 will receive $720 per year. Enhanced payments will take effect in January 2015 and will start to show up in monthly payments in July — just before a fall election. The cost of the enhanced UCCB will be offset by the elimination of the existing child tax credit beginning in 2015.
The simple truth is that the economic policy of our "economist" prime minister doesn't -- and never did -- make a particle of economic sense. It's always been about buying votes from a narrowly targeted group of voters -- Canada's wealthiest citizens.