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We’re Splitsville on Income Splitting...Now What?

February 14, 2014

2-minute read

Well, that was awkward.

Oh, sorry—I’m not talking about how the federal government, in a remarkable display of self-satire, cut short debate on the Fair Elections Act (or as I like to call it: “Democracy 2.0: Abridged too far”).

And, tempting as it is, I’m not hinting at the recent PBO analysis that demonstrates, directly contradicting the Treasury Board’s 18 days estimate, how sick leave in the Federal public service is virtually identical to the 11 days per year that private sector workers take.

Nor am I referring to the Federal Budget’s youth internship programs that, at best, address the needs of 1% of unemployed youth.

And I haven’t even begun to talk about the decision to soften the closing of Veterans Affairs offices across the country with a bit of money in the budget to defray funeral costs, and a commitment to “recognize” the Afghanistan war.

No, I’m talking about that needle-scratching-across-a-record-heard-round-the-country moment when, post-budget, Finance Minister Flaherty publicly voiced concerns that, because it would not benefit the vast majority of Canadians, perhaps we should hold off on income splitting.

Now, this should come as no surprise to those who have been paying attention. After all, the numbers had already been crunched—by both the CCPA and C.D. Howe—and the results clearly indicated that the program’s effectiveness was located somewhere on the corner of “does more harm than good” street and “a tax gift to Canada’s rich” boulevard.

But Minister’s Flaherty admission sparked a flurry of responses ranging from the Prime Minister’s insistence (during his stint as Interim Finance Minister when he took almost all the budget-related questions in Parliament the day after the budget while Mr. Flaherty sat silently) that tax reduction remained a key priority of this government; to Minister Kenney’s indignant “a promise is a promise” statement, hot on the heels of his post-budget tweet to Mr. Flaherty that doubled as an early Valentine’s Day card.

Not to be left out, Minister Clement attempted to position himself as on the side of “I don’t know….let’s see what works best for taxpayers.” Only he said it like this: “I’m all for giving people more jeans…more money in their jeans….” Which—be honest—sounds a bit odd.

By Thursday the media was trumpeting the death of this central Conservative policy plank that apparently everyone knew was a dreadful idea from the get-go but had decided to keep their skepticism a secret until Minister Flaherty’s comments (right, Globe and Mail?).

And by Thursday night, commentary was circulating suggesting that this had been the plan all along—that Mr. Flaherty had not exposed a “rift” but rather had provided an opening to abandon income splitting (perhaps no longer a winner according to Conservative polling) and introduce something else to “help” families. (Because I hear there are a lot of them. Who vote.)

Think this might mean big policy-building changes? Don’t get too excited, folks. It looks like we may see “enhancements” to another inadequate initiative—the Universal Child Care Benefit (UCCB). In fact, the UCCB’s current annual $2.7 billion dollars-for-diapers-but-not-for-daycare tab could be doubled by adding to it what the “Family Tax Cut” would have cost.  (Think of it as a box of Pot of Gold chocolates on top of the bouquet of wilted red carnations picked up from the drugstore on the way home.)

Do the math (actually, the CCPA has already done it for you). That’s over $5 billion that could help create a universal child care program that not only helps care for and educate kids across the country, but also gives back to society in jobs and self-sustaining economic and social stimulus. And we know this because we have a living, breathing, working example in Quebec.

So, it looks like the battle—so to speak—has been won on income splitting. (Of course, it does help when the numbers and facts are on your side, but as we’ve seen in the past that’s not always a guarantee of good policy decisions.) But it’ll be a hollow victory for the very families the government claims to be helping if that assistance takes, for example, the form of a slightly topped-up family allowance that doesn’t come close to even the Fraser Institute’s estimates of what it costs to raise a child.

It’s been a crazy couple of weeks in Canadian politics. So, Happy Valentine’s Day. Can't you just feel the love?

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