Canadian PM Harper unveils family tax breaks ahead of election

Thu Oct 30, 2014 4:50pm EDT
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By Alastair Sharp

VAUGHAN Ontario (Reuters) - Canadian Prime Minister Stephen Harper unveiled C$26.76 billion ($23.89 billion) in family tax cuts and benefits over six years on Thursday, which will start flowing to voters over the coming year as the country gears up for an election next October.

Normally, tax measures are only introduced in the government's spring budget. But the timing of Harper's move means that, instead of seeing election promises, voters will start seeing actual government checks and lower taxes before next October's election.

Having the tax measures already in place could also make it more difficult for opposition parties to pledge to revoke them if elected, limiting their room for maneuver against the governing Conservatives in the upcoming campaign.

"We're doing this in a way that assures that the things we promised in the last election will actually reach people in the life of this Parliament," Harper told reporters.

The most controversial measure would allow "income-splitting" for parents with children under 18. That would let a parent transfer C$50,000 of income for tax purposes to a lower-earning spouse, where the income would be taxed at a lower rate.

The plan would be of most benefit to families in which one spouse, such as a stay-at-home parent, has substantially less income than the other. The tax break will be capped at C$2,000, which limits its cost to about C$2 billion per year instead of the C$2.5 billion estimated in the Conservatives' 2011 election platform.

The fate of the income-splitting campaign pledge came into question earlier this year when late Finance Minister Jim Flaherty said he was not sure it would benefit society overall.

New Democratic Party leader Thomas Mulcair said the income-splitting plan would "cost billions of dollars and still give absolutely no help to 86 percent of Canadian families... How does that benefit our society?"   Continued...

Canada's Prime Minister Stephen Harper speaks at the Joseph & Wolf Lebovic Jewish Community Campus in front of an audience of school children in Vaughan, October 30, 2014. REUTERS/Mark Blinch