Our Conservative finance minister is a socialist?
Flaherty comes out against Harper’s tax cut promise
OTTAWA—Finance Minister Jim Flaherty has come out strongly against one of Prime Minister Stephen Harper’s key tax cut promises.
Coming a day after the federal budget, Flaherty’s questioning of Harper’s pledge on income-splitting for tax purposes left the Conservatives scrambling to deal with a potential split between the government’s two most important figures.
Flaherty has been saying for several weeks the Conservatives need to take a close look at income-splitting but his remarks on Wednesday marked his most serious challenge to the proposal.
Income-splitting, which would allow couples with children under age 18 to split up to $50,000 of income a year for tax purposes, was promised by Harper in the 2011 election campaign — contingent on balancing Ottawa’s books.
But the idea has been criticized by some economists because it is expensive — Ottawa would forego more than $2 billion a year in revenue — and the tax savings would mainly go to families where one spouse has a high income and the other has a lower income, or no income.
“It benefits some parts of the Canadian population a lot and other parts of the Canadian population, virtually not at all,” Flaherty said in a news conference Wednesday.
Earlier, in a question-and-answer session before an Ottawa business audience, he said, “I think income-splitting needs a long, hard analytical look . . . to see who it affects in this society and to what degree, because I’m not sure that, overall, it benefits our society.”
But insiders say income-splitting is favoured as a winning election promise by those around the prime minister. In 2011, Harper said treating couples as individuals for income tax purposes was unfair and should be changed.
“The tax system does not recognize the fact that many, even most families, pool their income to pay their household bills,” Harper said at the time. “We think that once the budget is balanced, fixing this should be one of our highest priorities.”
The Conservatives estimate that nearly 1.8 million families would be able to take advantage of the tax plan and they would save an average of $1,300 annually.
In question period in the Commons on Wednesday, Harper confirmed the Conservatives would go ahead with tax cuts for families once the deficit is wiped out.
Openly questioning a committed Conservative policy is rare in Harper’s government, and Tory Members of Parliament appeared split about how to handle the growing controversy over the tax proposal.
“We keep our election promises. We made this commitment to do this policy in the next budget,” Employment Minister Jason Kenney said.
Kenney didn’t answer directly when asked if Flaherty should resign if there’s a split with the prime minister on policy. “Of course there’s always going to be issues around how exactly you deliver it because there’s a lot of different ways of doing that,” he said. “But the bottom line is we’re committed to tax relief for Canadian families.”
Conservative MP James Rajotte, chair of the Commons finance committee, said it’s a matter of looking closely at income-splitting. “My understanding is what has happened is the campaign commitment is still there, what the minister is asking for is a full costing, a full analysis, prior to doing so. That’s my understanding of what he has said.”
NDP MP Peter Julian said Flaherty’s comments appear to contradict what was a clear election pledge.
“The Conservatives made a commitment. They ran on that issue in the last election campaign and now they seem to be backing off or maybe there is a split,” Julian said.
Liberal Leader Justin Trudeau said that Flaherty makes some “good points” in raising concerns about who will benefit from income-splitting.
“The various reports out about income-splitting suggest that it is more beneficial, in general, to richer families rather than middle families,” Trudeau told reporters.
Flaherty comes out against Harper’s tax cut promise
Flaherty comes out against Harper’s tax cut promise
OTTAWA—Finance Minister Jim Flaherty has come out strongly against one of Prime Minister Stephen Harper’s key tax cut promises.
Coming a day after the federal budget, Flaherty’s questioning of Harper’s pledge on income-splitting for tax purposes left the Conservatives scrambling to deal with a potential split between the government’s two most important figures.
Flaherty has been saying for several weeks the Conservatives need to take a close look at income-splitting but his remarks on Wednesday marked his most serious challenge to the proposal.
Income-splitting, which would allow couples with children under age 18 to split up to $50,000 of income a year for tax purposes, was promised by Harper in the 2011 election campaign — contingent on balancing Ottawa’s books.
But the idea has been criticized by some economists because it is expensive — Ottawa would forego more than $2 billion a year in revenue — and the tax savings would mainly go to families where one spouse has a high income and the other has a lower income, or no income.
“It benefits some parts of the Canadian population a lot and other parts of the Canadian population, virtually not at all,” Flaherty said in a news conference Wednesday.
Earlier, in a question-and-answer session before an Ottawa business audience, he said, “I think income-splitting needs a long, hard analytical look . . . to see who it affects in this society and to what degree, because I’m not sure that, overall, it benefits our society.”
But insiders say income-splitting is favoured as a winning election promise by those around the prime minister. In 2011, Harper said treating couples as individuals for income tax purposes was unfair and should be changed.
“The tax system does not recognize the fact that many, even most families, pool their income to pay their household bills,” Harper said at the time. “We think that once the budget is balanced, fixing this should be one of our highest priorities.”
The Conservatives estimate that nearly 1.8 million families would be able to take advantage of the tax plan and they would save an average of $1,300 annually.
In question period in the Commons on Wednesday, Harper confirmed the Conservatives would go ahead with tax cuts for families once the deficit is wiped out.
Openly questioning a committed Conservative policy is rare in Harper’s government, and Tory Members of Parliament appeared split about how to handle the growing controversy over the tax proposal.
“We keep our election promises. We made this commitment to do this policy in the next budget,” Employment Minister Jason Kenney said.
Kenney didn’t answer directly when asked if Flaherty should resign if there’s a split with the prime minister on policy. “Of course there’s always going to be issues around how exactly you deliver it because there’s a lot of different ways of doing that,” he said. “But the bottom line is we’re committed to tax relief for Canadian families.”
Conservative MP James Rajotte, chair of the Commons finance committee, said it’s a matter of looking closely at income-splitting. “My understanding is what has happened is the campaign commitment is still there, what the minister is asking for is a full costing, a full analysis, prior to doing so. That’s my understanding of what he has said.”
NDP MP Peter Julian said Flaherty’s comments appear to contradict what was a clear election pledge.
“The Conservatives made a commitment. They ran on that issue in the last election campaign and now they seem to be backing off or maybe there is a split,” Julian said.
Liberal Leader Justin Trudeau said that Flaherty makes some “good points” in raising concerns about who will benefit from income-splitting.
“The various reports out about income-splitting suggest that it is more beneficial, in general, to richer families rather than middle families,” Trudeau told reporters.
Flaherty comes out against Harper’s tax cut promise