March 8, 2008 / 1:14 AM / in 10 years

Canada government slams opposition tax-break bill

OTTAWA (Reuters) - An opposition bill proposing a new tax break for Canadian parents is speeding through Parliament, to the alarm of the Conservative government, which described it on Friday as a “reckless” plan that would drive it into deficit.

The legislation, proposed by a Liberal legislator, would allow Canadians a tax deduction for payments made into registered education savings plans and allow them to contribute up to C$5,000 ($5,040) a year.

The Department of Finance estimates the measure would cost over C$900 million a year in lost government revenue.

“I see this as an abuse of a parliamentarian’s privilege to put forward a bill,” Ted Menzies, parliamentary secretary for Finance Minister Jim Flaherty, told Reuters.

“It should be for the good of the country, it shouldn’t be to put the government in deficit and that was his intention,” he said.

The Conservative government, which holds only a minority of seats in the House of Commons, hopes to still block the bill from becoming law.

Ottawa’s budget, unveiled on February 26, foresees the smallest surplus in a decade for 2009-10 at C$1.3 billion and a slightly bigger surplus in 2008-09 of C$2.3 billion.

The proposed tax measure would effectively make the education savings plans very similar to retirement savings plans for tax purposes, and potentially more attractive than a new tax-free savings account that the government unveiled in its budget.

The bill, introduced by Liberal legislator Dan McTeague, won the support of all three opposition parties in the House on Wednesday and is now in the hands of the Liberal-dominated Senate.

Menzies said he would do his best to persuade senators to defeat the bill in the upper chamber.

“I will be speaking to the senators and hoping that there’s some good heads there that will realize that this is not good use of money,” he said.

“They may put in an amendment, that’s their choice.”

The Conservative government of Prime Minister Stephen Harper needs the support of at least one of the opposition parties to pass legislation and to stay in power.

So far, the Liberals under leader Stephane Dion have passed up several opportunities to defeat the government on confidence motions, including allowing the budget to pass by keeping most of their members absent from Parliament for the vote.

Reporting by Louise Egan; editing by Rob Wilson

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