Social Policy in Ontario

Income redistribution, Harper-style

Posted on November 6, 2014 in Equality Debates

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TheStar.com – Opinion/Commentary – Prime Minister Stephen Harper unveils ‘family tax cut’ aimed at better-off parents who don’t need child care.
Nov 04 2014.   By: Carol Goar, Star Columnist

There went Canada’s surplus for the next four years.

The tax cuts and children’s benefit top-ups that Prime Minister Stephen Harper announced last week will eat up $27 billion. That is approximately the amount the federal finance department is projecting in annual surpluses from now until 2018.

Canadians sacrificed a lot — public services and programs, reliable statistics, environmental safeguards, up-to-date infrastructure and a human voice on the phone — to create this pool of black ink. And now without public or political debate, it’s gone.

Is this how Canadians would have chosen to spend their surplus?

For about 15 per cent of the population, the answer is an enthusiastic yes. These taxpayers — typically high-earning breadwinners with stay-at-home spouses and kids — will receive an average of $1,140 more a year in tax relief and children’s benefits.

For 12 per cent of Canadians — single parents and working parents in similar tax brackets — the answer is an equivocal yes. They’ll get an additional $615 a year in children’s benefits, but no tax reduction.

For the remaining 73 per cent of the population — couples without children, parents of children over 18, young singles and pensioners — the answer ranges from an altruistic maybe (in the case of grandparents) to a flat no (in the case underemployed youth). They will get nothing,

What this amounts to is a massive income transfer wrapped in child-friendly language.

“Our government is utterly convinced of one thing: when it comes to the cost of raising a family Canada’s moms and dads deserve all of the help that we can give them,” Harper said.
But not all of Canada’s moms and dads:

The lion’s share of the $27 billion will go to better-off families. They’re the only ones who can afford the “traditional” model of child-rearing in which Dad works, Mom takes care of the kids and one income supports everybody.

A disproportionate percentage will go to parents in Alberta and Saskatchewan, where one-earner families are more common than in eastern Canada. According to the Broadbent Institute, which analyzed the regional impact of Harper’s plan, 22.8 per cent of families with children in Alberta are eligible for the maximum benefit compared to 13.8 per cent nationally. Just 7.4 per cent of Quebec families with children qualify for the full benefit. (Ontario is in the middle at 14.1 per cent.)

Parents in their late 20s and 30s, who set aside money to start a family, will do better than their younger counterparts who need two incomes.

And families with grandparents nearby who can take care of the children will be at an advantage. This arrangement allows one parent to work part-time while the other maximizes the family income.

In all cases, tax dollars flow from the majority of Canadians to a well-off minority.

The Prime Minister was acutely aware of this when he announced the fulfillment of his 2011 election promise to allow couples with children to split their income. Economists of all political stripes — even former finance ministerJim Flaherty— had warned that the vast majority of Canadians would not benefit.

To forestall criticism, he capped the tax benefit at $2,000 and supplemented it with a $60-a-month increase in the Universal Child Care Benefit and a new allowance for children 6 to 17. These measures made the proposal more politically palatable, but did not address its fundamental inequity. As Liberal leader Justin Trudeau pointed out, families like his — the Liberal leader’s wife, former television host Sophie Grégoire, is now a full-time homemaker — would get the maximum benefit but families in need would not get much help.

Moreover, the cost of the package will increase Ottawa’s fiscal vulnerability. If revenues fail to meet the government expectations — which is quite conceivable in the light of the 29 per cent drop in oil prices in the last five months — Harper’s tax breaks and children’s benefits could tip the budget back into red ink. It depends how much padding the government built into its projections.

Superficially the Tory payout has a lot of appeal. Nothing speaks as loudly to voters as cash.

But draining federal coffers precludes badly needed investments, not just in child care but in urban transit, affordable housing, pensions, help for workers supporting aging parents and sustainable energy.
That is the real choice in 2015: selective tax relief or a platform that works for everyone.

< http://www.thestar.com/opinion/commentary/2014/11/04/income_redistribution_harperstyle_goar.html >

Tags: budget, economy, featured, ideology, participation, tax

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