Harper Pledges Tax Breaks For Canadian Families

by Mike Godfrey, Tax-News.com, Washington

01 October 2008

Canadian Prime Minister Stephen Harper has announced new tax breaks and savings initiatives to expand opportunities for Canadian children in a bid to appeal to the family vote ahead of the forthcoming general election.

The Conservative plan would establish a new Children’s Arts Tax Credit, worth an estimated CAD150mn (USD143.5mn) annually; extend the benefit of the existing Children’s Fitness Tax Credit and the new Children’s Art Tax Credit to lower-income families that pay little or no income tax, by making both credits fully refundable; and expand the Registered Education Savings Plan (RESP) to allow charities and not-for-profit organizations to establish RESPs for children from low-income families in partnership with parents.

“Giving working families a break is one of the most important Conservative priorities,” Harper announced on Monday. “It is why we have taken bold action to deliver real results to parents and their children.”

Harper said that Monday's announcement builds on "modest, practical, credible and affordable improvements" introduced by the Conservative government since 2006, including reducing the GST to 5% from 7%, introducing a CAD100 per month Universal Child Care Benefit and providing targeted tax cuts for apprentice tools, textbooks and transit passes.

“These new policies will help give a break to working Canadian families. And they will make arts and fitness programs more accessible to all families, including families where financial costs impose real barriers," Harper said.

Harper has however, resisted the temptation to shower the electorate with additional tax gifts, arguing that now is the time for fiscal consolidation as the fall-out from the US financial crisis works its way through the global economic system. His only other major tax pledge during the election campaign has been a proposal to halve the rate of tax on diesel to reduce transportation costs and dampen inflation.

The opposition Liberals have, by contrast, set out plans to lower the net rate of corporate tax to 14% by 2013, cut small business tax and dish out additional tax incentives to firms investing in green technology.

The party also intends to reverse the current government's controversial decision to impose a new tax on income trusts, offer lower tax rates to those on low-and middle-incomes, and introduce new family tax credits.

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