PM Stephen Harper defends controversial income splitting tax break
PM Stephen Harper defends controversial income splitting tax break
By Mark A. Cadiz
On the verge of an election campaign, Prime Minister Stephen Harper attended his first media roundtable with the GTA’s cultural communities this year, after announcing his party’s new anti-terrorism bill Friday, Jan. 30 in Richmond Hill, Ont.
Highlighting the integral role of ethnic media in Toronto, often seen by immigrant communities as more authoritative than mainstream media, Harper re-iterated the reasoning behind the proposed anti-terrorism bill and his commitment to improve the economy.
Prime Minister Stephen Harper announces anti-terrorism measures to protect Canadians from the evolving threat of terrorism and extremism. (Photo courtesy of Jason Ransom
“Our number one priority remains the economy; creating growth and creating jobs,” Harper said.
“This year balancing our budget while making sure we fully implement our tax reductions for families. Terrorism and security, both in terms of the areas of criminal justice and terrorism will also remain a priority for the government moving forward.”
The roundtable which saw eight groups from the Asian and South Asian communities represented discussed economic partnerships and domestic issues affecting Canadians.
The Philippine Reporter also questioned Harper about his government’s controversial income-splitting scheme, known as the family tax cut, which has been widely criticized by opposition parties and several independent research institutes—all claiming that low-income, middle-class and single-parent families will see no positive benefit.
“This is simply not true,” Harper said. The reason why they say these things is because they want to take income splitting away. That’s how they are going to justify raising taxes on Canadian families.”
The family tax cut put in place by the Conservative Party permits married couples with children under 18 to transfer up to $50,000 in taxable income from the higher income spouse to the lower income spouse granting the household a lower personal income tax rate, essentially allowing family households to save up to $2000 a year per couple.
One criticism from the Broadbent Institute, an independent non-partisan organization, said during their study it found that the majority of Canadian families with children under 18 would get no benefit from the family tax cut. In Ontario 53.3 per cent of families will not benefit from the family tax cut, and at the national level more than half of Canadian families, 54.1 per cent, will not benefit from it either. And even worse when capped at $2000 per household only 32.2 per cent of all Canadian families will benefit according to the study.
In another study by the C.D. Howe Institute their findings claim that gains would be highly concentrated among high-income, one-earner couples earning above $125,000.
Now the purpose behind the income split is to correct the inequality of how households are taxed. For instance when a household earns $100,000 split evenly between both income earners, then they are paying less taxes when compared to another household where only one spouse is working and earning $100,000.
The reported estimated cost to implement the income tax split will cost the federal government approximately $2.4 billion and another $2 billion for provinces if they decided to follow suit.
Despite the criticism Harper does not agree, and sees this as the opposition’s attempt to take money away from the income splitting scheme and spend it on government bureaucracy for childcare.
“The Liberals and NDP have not only opposed income splitting, but they have also opposed the universal childcare benefit,” Harper said.
Let me be clear, the series of measures we brought in which wasn’t just income splitting, but also enhanced expense deductions for those who use institutional childcare, and also the expanded universal childcare benefit…all those things taken together, every single Canadian family with children benefits every single one of them.”
For more information about the family tax cut please visit the Canada Revenue Agency website.
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