Analysis

Winnipeg Free Press - PRINT EDITION

Don't turn income-splitting into sacrifice

By: Kamloops Daily News

Posted: 11/16/2012 1:00 AM | Comments: 0

Those families counting on the Conservative government to follow through on an election promise to allow income-splitting probably weren't surprised to hear the plan is now in doubt. Even though chances were good the Tories wouldn't balance the budget by 2014-15 -- a key condition to establishing income-splitting -- disappointment is likely running high.

During the last election campaign, the Harper government promised income-sharing for couples with dependent children under 18 years. The plan would give spouses the choice to share up to $50,000 of their household income for federal income tax purposes. The Family Tax Cut would be set up when Ottawa balanced its books.

After Finance Minister Jim Flaherty announced on Tuesday he has pushed back his target date for eliminating the deficit by one year, fulfilling that promise seems to be as distant as ever. For many families living on a single income, any help on taxes would have been welcome news.

The thinking behind income-splitting goes like this: a spouse who earns $50,000 a year can split that amount, bringing the income between two parents to $25,000 each, thereby reducing their tax burden.

It's a good plan that shouldn't be derailed by economic conditions. After all, income-splitting would go a long way to help those families seeking an alternative to child care by encouraging a parent to stay home. The benefits of providing consistent parental care in a relaxing, nurturing environment are obvious.

But Ottawa wants to implement the plan only if it balances its budget because income-splitting doesn't come cheap. But if the current proposal is too broad, which makes it more expensive, why not narrow it and focus on families that need it most?

Instead of allowing income splitting up to $50,000, bring it down to $40,000. And instead of allowing it for families with kids under 18, move it to children under six, which would still make the tax break effective.

While we are under no illusion Flaherty will take our suggestion, it would be disheartening if income-splitting were placed on the back burner and forgotten.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition November 16, 2012 A15

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