Tory parental credit would cost $600M: PBO

Conservative Leader Andrew Scheer’s proposed tax credit for parents would cost the federal government over $600 million in lost revenues in the first year — and this could go even higher, says a new report by the federal budget watchdog.

The parliamentary budget office report released Thursday said Bill C-394, which would offer a tax credit for those on parental leave, would result in foregone revenues of $607.6 million in 2018-19.

As a non-refundable tax credit, not all families would be able to claim the total amount in the first year. This means a further $261 million would likely be added to the costs of the measure in future years, PBO calculations found.

Scheer tabled his private member’s bill in February, promoting it as a way to help parents offset taxes owing on their maternity and parental leave.

It is, so far, one of the few concrete policy proposals he has put forward publicly since becoming Conservative leader.

“When parents go on EI parental or maternity leave, they sacrifice up to 45 per cent of their salary,” Scheer said during second reading of his bill two weeks ago. “After making that sacrifice, they have to pay tax on the benefits they receive. With tax being withheld from every cheque, it means that families with a parent on leave see their take-home benefits cut down and many get hit with an extra tax bill afterwards when they file their income taxes.”

The parliamentary budget office delved into the projected costs of the credit, using employment insurance claim data.

The tax credit, as proposed, would allow parents on maternity or parental leave to reduce their taxes by 15 per cent.

Quebec residents receiving benefits under that province’s separate provincial parental insurance plan would also be eligible for a tax credit for an equivalent amount.

The total cost for 2018-19 of $607.6 million would rise incrementally each year for the next five years, the PBO found.