Harper’s tax changes won’t have much impact on average families, experts say

By Ally Harris
Nov. 17, 2014

Teresa Wright isn’t going to complain if she starts receiving cheques from the federal government in the mail.
“Having more money is always good,” she said.
But she isn’t sure recently announced increases to the universal child care benefit will actually end up helping with the cost of child care.
In October, Prime Minister Stephen Harper announced a number of tax changes. Among them, the $100 a month child care benefit for children under the age of six would increase to $160.
When the benefit was originally introduced in 2006, Wright’s oldest son was in daycare. But soon after the cheques started arriving in the mail, she said the daycare centre increased its rates.
“So it didn’t end up helping me with the childcare rates at all.”
She wouldn’t be surprised if this happened again, she said.
“Child care centres across the country have often talked about how they can’t pay their workers enough.
“Taking care of other people’s kids all day long, that’s hard work. If they don’t make a whole lot of money, then any increases to their salaries, I think they deserve them.”
Wright doesn’t blame the child care centres for wanting to pay their employees more, but it makes the benefit increase redundant, she said.
“If everybody just raises their rates, it doesn’t end up helping the parents. It helps the child-care workers, but it doesn’t really help the parents.”
Don Desserud is a political science professor at UPEI. The amount the benefit is increasing is too insignificant to help, he said.
“It gives some relief, but it’s very small.”
In fact, the benefit encourages mothers to stay at home and take care of their children, he said.
“It’s not designed to encourage women to pursue careers or to give them the opportunity to pursue careers.”
Also among the announced tax changes was an income-splitting option.
It is aimed at couples where one person is in a higher tax bracket than the other. Now, up to $50,000 in income can be transferred between spouse’s tax bills.
Average Canadian families won’t see many of the benefits, Desserud said.
“If you don’t have children, if both your incomes are relatively high because you’re a professional woman and a professional man, or if you’re a working class family where you don’t have a high income, you won’t qualify, you won’t get much out of this at all.”
After the changes were announced, Liberal leader Justin Trudeau said they would eliminate this new option if they win the upcoming election.
“We don’t think it gives you value for taxes, or is it fair,” said Liberal MP Wayne Easter. “We think there’s a better way of doing it and getting value for money.”
However, they would not touch the income splitting for seniors, which has already been in place for a while, Easter said.
“You have a lot of seniors out there which this has shown to be fairly good value for money for them. There’s a lot of families in the seniors group where the tradition was you didn’t have two-working-income families in those times.
“The splitting of income for seniors I think brings fairness for the traditional family they have come out as.”
However, Desserud doesn’t believe the Liberals will simply be able to get rid of this program once it is already in place.
“It’s very tricky to do that. You’re not going to gain a single vote by cancelling that, but you will lose a lot of votes by cancelling it.”
The Liberals would probably have to leave the program in place, he said.
“They may over time erode it so that it’s gone, but in the short term there’s nothing for them to gain by (cancelling it).”