The federal government has announced that after seven years of deficits adding $144 billion to the federal debt, they expect to run a surplus in 2015-16.
What they haven’t admitted is that if taxes had been maintained at the same share of the economy, the deficit would have been eliminated long ago without having to cut public spending.
Regardless, the big question now is what we should do with the surplus?
The Harper government’s income splitting tax plan benefits the rich
The Harper government has made what they believe in clear: more tax cuts, including some that particularly benefit those with high incomes. In October they announced they would introduce income splitting for tax purposes as part of their “family tax plan.”
According to the government’s own calculations, the income splitting tax cut will cost the federal government $2.4 billion a year. That’s a lot of money that could do a lot of good.
Instead, most of the benefits of income splitting will go to Canadians who need it the least. As analysis by the C.D. Howe Institute has shown, 86 per cent of Canadian households—individuals, single parents, families with no children or older children, those with low and middle incomes, and couples with incomes in the same tax bracket—get nothing from income splitting. Meanwhile a small share of families making over $100,000 will gain 70 per cent of the total benefits, as Queen’s University Law Professor Kathleen Lahey has demonstrated.
Other elements of Harper’s plan would provide little net benefit to working families with children: a little more than a dollar a day per child, or the equivalent of as little as 10 minutes of child care per day.
However, Harper’s plan does conveniently mean issuing cheques to a select group of families just a few months before the election. There has to be a better, fairer and more effective way of helping working families.
The NDP’s plan for affordable child care
The NDP plan for affordable child care would provide quality accessible child care to Canadian families for no more than $15/day. The plan creates a savings for some of at least $35/day per child or $10,000 per year.
The plan would also create over 500,000 additional child care spaces by 2018-19 and support one million spaces by 2020. The plan would cost the federal government $5 billion annually, but the actual net cost to the federal government would be less than half this amount because it would have a strong stimulative effect on the economy, creating over 200,000 jobs and thereby generating additional revenues for federal and provincial governments.
Most importantly, an affordable child care plan like this would provide a million Canadian children with high quality, affordable public child care, and provide their parents with much better choices.
The differences between the visions are clear. Ultimately it will be up to the voters to decide which they prefer.