Friday, December 05, 2014

Devil in the Details

For the last monthe we in Canada have been inundated with ads announcing the Federal Government's proposed changes to the Income Tax system that will, in their opinion, be of great benefit to young families.

Now this is nothing new.  Political parties do this all the time.  There is a slight ethical issue in that the ads are funded by the government, not the political party and the changes 1) have not yet passed through Parliament and 2) are expected to form a large piece of the CPC election platform in next year's campaign (especially since the changes have a large bunch of cash arriving in people's bnk accounts just a few weeks before the election). 

But as always the devil is in the details.

To be fair, there is good stuff in here.  The increase in the Tax Credit for child Care expenses is needed.  The increase in the Universal Child Care Benefit is not a bad idea either.  Of course neither those things will do a whole lot to actually make Child Care affordable for lower-to-middle income families but they are a start.

ANd unlike many commentators I am not totally against teh "Family Tax Cut" (aka income splitting). I mean there are a whole lot of families (like ours) who will not benefit one cent from the plan.  But once in power governmensts have the right to support programs that flow with the ideals of their supporters.  Many CPC supporters (and MPs and Cabinet members and PArty staffers) support the idea of one-income families and income splitting is a good way to support that.  And I am sure there are a number of families in Grande Prairie who WILL benefit from this plan.  The inclusion of an upper limit that a family can save made it much more palatable to me.

The problematic point was a little line at the end of the description of enhanced UCCB payments.  And interestingly it got no airplay in the hype around the announcement or even in commentators talking about it (because they were sucked into the debate around income splitting).  Ir reads:
These enhancements to the UCCB would replace the Child Tax Credit, starting in the 2015 tax year

Now here is the thing.  The UCCB is taxable income, the Child Tax Credit is not.  Also the Child Tax Credit is MORE than the enhancements to the UCCB--in our case the difference as far as I can tell would be a negative $240/month.  And that is the money we have been using to build the education savings plan for post-secondary purposes.  Other families are using that money to buy food.  [AS a side note the UCCB was this governments idea of a National Child Care program--of course it comes nowhere near paying enough to make child care affordable.]  So for us, and I assume for MANY other families, these enhancements will cost money--and the enhancements move money from non-taxable to taxable income.

IT does strike me that this is an odd way to support lower-to-middle income families.  But then to be honest I do not think this government has every really been about doing things that will support lower-to-middle income Canadians as a primary goal of their tax program choices.

The devil is indeed in the details.

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