Sober Second Thought

At first blush the Conservative pledge during the last election that once the fiscal books were in balance the government intended to bring in income-splitting for families sounded like a lovely concession to tax-weary citizens, one that might benefit families with children to raise. One of those feel-good, warm and comfy types of ideas that endear those that hold aloft such promises as tempting bait to help vote them into office.

The current government is certainly no stranger to giving Canadians tax breaks. Some applaud those initiatives, others grumble that the government is sacrificing too great a slice of its income, not quite expendable, particularly during hard times. The government, soon after coming to office in 2006 with a minority vote, made good on its promise to alleviate the taxation strain on people by diminishing the Goods & Services tax.

And there were other handouts, all in good faith and the wish to give people a break. On the not-too-distant horizon sits the 2015 general election, patiently waiting for time to pass. The promised income-splitting will become an issue. It has already become an issue with economists stating that in essence the latest budget handed down by Finance Minister Jim Flaherty on Tuesday effectively signals the balancing of the books, the deficit on the brink of being wiped out.

Which means, should the government wish at this point to bring in income-splitting it very well could, but prudence and experience determines that it make this move perhaps in the next budget, closer to the 2015 election, so that the sweet tingle of gratitude might yet linger in voters' notoriously short memories. This government has done many good things in its practical wisdom for Canada but peoples' memories tend to lapse at the most inconvenient of times.

Happier times: Jim Flaherty and Stephen Harper enter the House of Commons on budget day, Tuesday, Feb. 11, 2014.

"It (income splitting for families) benefits some parts of the Canadian population a lot and other parts of the Canadian population virtually not at all. When we discuss it eventually in cabinet and caucus, I will present my analysis to my colleagues.
"Income splitting needs a long, hard analytical look. I'm not sure that, overall, it benefits our society."
Finance Minister Jim Flaherty

Prime Minister Stephen Harper stands in the House of Commons during Question Period, in Ottawa Tuesday, February 11, 2014. THE CANADIAN PRESS/Fred Chartrand

"This government said in the last election, made a commitment that when we balance the budget -- the budget is not yet balanced -- but when we (balance it), one of the highest priorities of this government will be tax reduction for Canadian families."
Prime Minister Stephen Harper

"All I know is we keep our platform commitments. We made a platform commitment to introduce income splitting when we get to a balanced budget. We'll get to a balanced budget next year, that's very clear."
Employment Minister Jason Kenney

Much as one might hesitate to criticize the Prime Minister, and with the recognition that it stands to reason that he, as an honourable man, would prefer to make good his promise, it seems more prudent to disappoint some people by withdrawing the promise with apologies. Because on second sober thought, income splitting will help some people, but not necessarily those who need help the most; say for example, single mothers.

It will be the families of mostly two nice incomes who stand to gain, or those with a single earner who makes a hefty salary, and not necessarily those who need it the most. The comfortable, the middle-class in the upper echelons of comfort, don't really need to have this additional advantage, the money could well be put to better use elsewhere. Say, for example, financing affordable housing, or housing for the indigent, the homeless, and we'd all feel better for it.

A report from the Canadian Centre for Policy Alternatives, a left-leaning think-tank claims that 86% of Canadian families would realize no benefit from the income-splitting becoming reality. The bottom 60% would receive $50 savings, and the highest earning 5% would benefit on average $1,100. A conclusion that the right-leaning C.D. Howe study concurs with, stating it "would create more inequalities in the tax system rather than less, and it is a flawed idea".

Back to the drawing board, Mr. Prime Minister. And good luck.