Tax cred­its or cash? Par­ties spar over what is best for parental ben­e­fits

The Prince George Citizen - - News - Stephanie LEVITZ

OT­TAWA — Is it bet­ter to be paid in credit or with cash?

That’s a ques­tion Lib­er­als and Con­ser­va­tives tus­seled over Tues­day in the on­go­ing fed­eral elec­tion com­pe­ti­tion for the votes of mid­dle-class fam­i­lies.

The Lib­er­als promised an ex­pan­sion to ex­ist­ing child and par­ent ben­e­fit pro­grams, in­clud­ing a pledge to make ma­ter­nity and parental ben­e­fits tax-free, ef­fec­tively one-upping their Con­ser­va­tive ri­vals who’d made a sim­i­lar pitch last week. For the Lib­er­als, the prom­ise came in the form of a com­mit­ment to re­mov­ing the taxes from the ben­e­fits.

“You’ll get ev­ery dol­lar right when you need it, since no taxes will be taken off the EI cheque when new par­ents re­ceive it,” Trudeau said at an event in St. John’s, N.L.

The Con­ser­va­tives, who have also claimed to be mak­ing the ben­e­fits tax-free, are promis­ing a tax credit. So par­ents would still see their ben­e­fits taxed by the gov­ern­ment, but they’d get a tax credit in re­turn.

The du­elling pitches un­der­score the dif­fer­ing ide­o­log­i­cal ap­proaches taken by the par­ties on how best to woo vot­ers.

Since the cam­paign be­gan last Wed­nes­day, the Con­ser­va­tives have fo­cused nearly ex­clu­sively on promis­ing a wide ar­ray of tax cuts.

By con­trast, the Lib­er­als have fo­cused on in­creased pro­gram spend­ing and, in the case of ben­e­fits for fam­i­lies, straight cash – both in tak­ing the taxes off the ben­e­fits, and via the prom­ise Tues­day to ex­pand the ex­ist­ing Canada Child Ben­e­fit to give more money to par­ents with chil­dren un­der the age of one.

Con­ser­va­tive Leader An­drew Scheer ar­gued the Lib­er­als were in fact adopt­ing a Tory tone by ex­pand­ing the CCB.

The CCB sends par­ents a monthly cheque if their in­come is below a cer­tain thresh­old. Un­der the pre­vi­ous Con­ser­va­tive gov­ern­ment, there had been a sim­i­lar pro­gram that saw all fam­i­lies – re­gard­less of in­come – also re­ceive a monthly pay­ment.

“That is a Con­ser­va­tive prin­ci­ple, know­ing that moms and dads make choices for their kids bet­ter than bu­reau­crats in Ot­tawa,” Scheer said at an event in Win­nipeg.

He was there to pro­mote his lat­est pol­icy idea, a com­mit­ment to in­crease the amount of money the fed­eral gov­ern­ment puts into Reg­is­tered Ed­u­ca­tion Sav­ings Plans. Like sev­eral oth­ers so far this cam­paign, it’s an up­dated ver­sion of some­thing the Con­ser­va­tives promised in 2015.

But be­hind-the-scenes, Scheer’s team was work­ing fu­ri­ously to ex­plain why their parental ben­e­fit pack­age was bet­ter then Trudeau’s. They’d al­ready come un­der crit­i­cism for call­ing it “tax free,” as the ben­e­fits ac­tu­ally re­main taxed.

In a back­ground doc­u­ment cir­cu­lated to re­porters, they ar­gued that with a 15 per cent tax credit ap­plied across the board, peo­ple would ben­e­fit from the pro­gram equally, and in some cases see their tax sav­ings be higher than the amount of money that’s cur­rently de­ducted for taxes on the ben­e­fit cheques.

An anal­y­sis of their ap­proach by Lind­say Tedds, a pro­fes­sor at the Univer­sity of Calgary’s School of Pub­lic Pol­icy, found that to what ex­tent their tax credit ac­tu­ally ben­e­fits fam­i­lies de­pends on a host of fac­tors, in­clud­ing other sources of in­come and other avail­able tax cred­its.

How the Lib­er­als plan would ben­e­fit fam­i­lies is also nu­anced.

The Lib­er­als did not ex­plain Tues­day how they will struc­ture the pro­gram, which would re­quired over­haul­ing tax laws. But if the ben­e­fits are tax-free, it may mean they won’t be con­sid­ered in­come at all, much like the cur­rent Canada Child Ben­e­fit.

So at tax time, they wouldn’t be counted to­wards a per­son’s over­all tax bur­den, said Jen­nifer Rob­son, a pro­fes­sor at Car­leton Univer­sity.

“You end up with a rip­ple ef­fect – not only are you sav­ing the taxes on EI, but then the ef­fec­tive tax rate on all your other in­come also drops,” Rob­son said.

In turn, the Lib­eral prom­ise could ben­e­fit those with higher in­comes more than those in lower brack­ets, in terms of tax sav­ings.

What unites the two prom­ises how­ever is that nei­ther party has ex­plained how they’re go­ing to pay for them.

NDP Leader Jag­meet Singh also faced ques­tions Tues­day about how his party will achieve its goals as he promised to build 500,000 new af­ford­able homes across the coun­try in 10 years, if elected.

“We would make dif­fer­ent choices, we would spend more and do it im­me­di­ately,” he said at an event in Ot­tawa.

How lit­tle choice Cana­di­ans seem to have when it comes to how per­sonal in­for­ma­tion gets shared was the sub­ject of the day for the Greens.

Leader El­iz­a­beth May promised she would bring in im­proved pri­vacy laws and re­quire com­pa­nies to re­spect the “right to be for­got­ten” – a prin­ci­ple that peo­ple should be able to con­trol whether in­for­ma­tion from their pasts re­mains on­line.

The Greens also want to reg­u­late Face­book, Twit­ter and other so­cial-me­dia plat­forms to en­sure that only peo­ple with ver­i­fi­able iden­ti­ties can use the plat­forms to pub­lish.

“This is at a cri­sis stage,” May said at an event in Water­loo, Ont., the heart of the province’s tech sec­tor.

“(Com­pa­nies) are min­ing for profit our pri­vate in­for­ma­tion and it’s time we put it to a stop.”

Peo­ple’s Party of Canada Leader Maxime Bernier has taken his cam­paign to New Brunswick for the mid­dle part of the week.

— with files from Jor­dan Press


Fed­eral Con­ser­va­tive leader An­drew Scheer speaks at a child care fa­cil­ity in Toronto on Aug. 20.


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