To the Editor:
Within hours of the federal budget last spring, then-Finance Minister, the late Jim Flaherty, caused a flap in his own Conservative Caucus by openly criticizing Stephen Harper's favorite proposed tax break.
For more than four years, Mr. Harper has been promoting a form of "income splitting" whereby a higher-income taxpayer could assign a portion of his/her earnings (up to $50,000) to his/her spouse to be taxed at the spouse's lower rate. Mr. Flaherty was concerned that such a policy would be expensive and quite unfair to the vast majority of Canadians. He was right.
His concerns were echoed and amplified by the independent analyses of the C.D. Howe Institute, the Canadian Centre for Policy Alternatives, the Fraser Institute, the Broadbent Institute, the Parliamentary Budget Officer, the 3-D Policy group, the Caledon Institute, and many others. Mr. Harper has announced some policy tweaks to his plan (including a "cap" on the largest benefits going to the very wealthiest Canadians), but Mr. Flaherty's criticisms remain valid.
The proposed income splitting scheme will cost the federal treasury some $2-billion annually, providing benefits to fewer than 15% of Canadian households - 85% are left out.
Single moms and single dads get nothing. Spouses with similar incomes (within the same tax bracket) get nothing. Families without children under the age of 18 get nothing. The most needy and lowest income families get nothing.
Through this plan, Mr. Harper is also continuing his practice of convoluting the tax code with boutique measures which narrowly reflect conservative social engineering. You have to wedge yourself into a conservative social policy pigeon-hole in order to qualify, but Mr. Harper's mould doesn't fit the reality of most Canadians' lives.
And with every new measure, the tax code gets more complex and incomprehensible, making broad-based personal income tax rate reductions more and more unlikely. And that does nothing for Canadian competitiveness or economic growth.
Ralph Goodale, Member of Parliament for Wascana
