Stephen Harper announces family tax cut, child care benefit boost

Prime Minister Stephen Harper has announced a new "family tax cut," a limited version of an income-splitting promise he made during the 2011 federal election, as well as a boost to the monthly universal child care benefit and a higher child care expenses deduction.

New tax cuts for families

9 years ago
Duration 3:08
Featured VideoPM Stephen Harper promises a boost to the monthly universal child care benefit and a higher child care expense deduction

Prime Minister Stephen Harper has announced a new "family tax cut," a version of the family income-splitting promise he made during the 2011 federal election, along with increases to monthly child care benefit cheques and to the amount taxpayers can deduct for child care expenses.

The tax cut comes in the form of a non-refundable federal tax credit — meaning it will have no effect on provincial income taxes — and is capped at $2,000.

Harper made his announcement at a campaign-style event at a community centre north of Toronto. He was joined by Finance Minister Joe Oliver and other Conservative MPs, including several from the Toronto area.

The prime minister also announced a boost to the universal child care benefit, to $160 a month per child up to age six from the current $100 per month, and is introducing a credit of $60 per month for children aged six to 17 years.

The new benefits go into effect on Jan. 1, 2015, but the government will wait until July to make the first payments and make them retroactive.

That means every Canadian family with children under 18 is set to receive $420 per child just three months ahead of the next scheduled federal election — plus regular monthly cheques as the campaign nears.

"Our goal has always been to make sure that Canada is the best country in the world in which to raise a family," Harper told the assembled crowd in Vaughan, Ont.

"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."

The enhanced UCCB would replace the existing Child Tax Credit, starting in the 2015 tax year. The Child Tax Credit is a non-refundable tax credit which allows parents to claim a certain amount per child under the age of 18.

Changes to 2011 promise, but more money

Harper's 2011 promise on income splitting was contingent on a balanced budget, a goal that will officially be met with next spring's budget and one that many observers believe is already a fact.

The 2011 proposal promised couples the ability to transfer up to $50,000 from one spouse or partner to the other to take advantage of lower tax brackets, a move the government projected would cost $2.7 billion per year.

Thursday's announcement puts a cap of $2,000 on the tax savings for each couple, which will reduce the cost of the program and free up money for the universal child care credit increase.

Those two measures together will cost $3.1 billion in 2014-15 and $4.5 billion in 2015-16.

Harper also announced that the limit on the child-care expenses deduction, which allows taxpayers to claim child-care expenses incurred in order to work or go to school, will be raised by $1,000.

Harper said all the measures being introduced would save Canadian families on average $1,100 a year, but higher-income families with more children will stand to save significantly more than that.

Opposition reacts

NDP Leader Tom Mulcair criticized the income-splitting plan even before Harper's event had begun, but didn't answer directly whether he would roll it back if elected prime minister.

"This is a plan, as (former finance minister) Jim Flaherty said, that will increase inequality in our society," Mulcair said.

Prime Minister Stephen Harper does arts and crafts with a student at the Joseph and Wolf Lebovic Jewish Community Campus in Vaughan, Ont. (Nathan Denette/Canadian Press)
"It will only help a very small minority of people at a time when inequality is increasing in our society after years and years of Liberal and Conservative rule."

Liberal Leader Justin Trudeau was also not impressed with Harper's announcements.

"Income splitting is an idea that will give a $2,000 tax cut to families like mine or Mr. Harper's — that's not good enough," he told reporters during a brief statement in Whitby, Ont., where he was campaigning for next month's federal byelection with Liberal candidate Celina Caesar-Chavannes. He did not offer a counter-proposal.

Thursday's event included Harper interviewing a pair of "average" Canadian families on either side of the stage about the daily challenges of raising a family.

Harper previously announced the federal children's fitness tax credit will be doubled immediately, to a maximum credit of $150 per child from $75, and made fully refundable as of 2015. A refundable credit means parents whose incomes are too low to pay taxes will still get money.

The New Democrats announced a $15-a-day child-care plan earlier this month as part of an ambitious plan to create or maintain a million affordable daycare spaces across the country.

Liberal Leader Justin Trudeau has already vowed he’d reverse a Conservative income-splitting policy if his party forms a government. Trudeau will speak to reporters after Harper's announcement.

With files from The Canadian Press