OTTAWA—The Conservative government's new tax package is a throwback to an earlier era that stands to deepen inequality and will do little to alleviate child care costs, the Broadbent Institute says.
The revised income splitting scheme, which will now cap benefits at $2,000 with a price tag of $12.65 billion over six years, remains fundamentally unequal. Half of families with children under 18 – the target of the Mad Men style scheme – will receive no benefit whatsoever, even though the scheme will cost nearly half of the total package announced.
This includes the one in five families with single parents and the three in 10 families with partners that are in the same tax bracket. Fully 89.9% of Canadian households will not benefit from the scheme, according to a statistical analysis previously released by the Institute.
"The Conservatives are trying to put lipstick on a pig. The greatest benefits would still go to the highest income earners with stay-at-home spouses, but would do little for low-income families most in need of support, many of whom earn too little to receive the benefit," said Rick Smith, the Broadbent Institute's Executive Director.
The second part of the package, the expansion of the Universal Child Care Benefit at a cost of about $5 billion per year, represents the return to the old flat rate family allowance.
"Instead, the government should be expanding the Canada Child Tax Benefit and the National Child Benefit Supplement targeted to mid- and lower-income families most in need and investing in a national child care program to create affordable, high-quality spaces," said Smith.
The package also includes an increase in the Child Care Expense Deduction limits, representing a small fraction -- $395 million -- out of the multi-billion dollar package. "Parents looking for federal leadership on child care won’t be fooled. This package doesn’t create a single child care space," said Smith.
"It’s outrageous the government is torquing the tax system to serve the political goals of the Conservative Party," added Smith, noting families will be receiving six months worth of the increased UCCB next July, on the eve of the next federal election.