OTTAWA -- Conservative Leader Andrew Scheer's proposed tax credit for parents would cost the federal government over $600 million dollars in lost revenues in the first year -- and this could go even higher, says a new report by the federal budget watchdog.

The parliamentary budget office report released Thursday said Bill C-394, which would offer a tax credit for those on parental leave, would result in foregone revenues of $607.6 million in 2018-19.

As a non-refundable tax credit, not all families would be able to claim the total amount in the first year. This means a further $261 million would likely be added to the costs of the measure in future years, PBO calculations found.

Scheer tabled his private member's bill in February, promoting it as a way to help parents offset taxes owing on their maternity and parental leave.

It is, so far, one of the few concrete policy proposals he has put forward publicly since becoming Conservative leader.

"When parents go on EI parental or maternity leave, they sacrifice up to 45 per cent of their salary," Scheer said during second reading of his bill two weeks ago. "After making that sacrifice, they have to pay tax on the benefits they receive. With tax being withheld from every cheque, it means that families with a parent on leave see their take-home benefits cut down and many get hit with an extra tax bill afterwards when they file their income taxes."

The parliamentary budget office delved into the projected costs of the credit, using employment insurance claim data.

The tax credit, as proposed, would allow parents on maternity or parental leave to reduce their taxes by 15 per cent.

Quebec residents receiving benefits under that province's separate provincial parental insurance plan would also be eligible for a tax credit for an equivalent amount.

The total cost for 2018-19 of $607.6 million would rise incrementally each year for the next five years, the PBO found.

Additional costs for families who do not claim their full amounts would result in additional costs of $261 million the first year, which could also rise incrementally, or could get even larger in a single year, then drop in subsequent years, depending on how many people claim it.

The report also measured how the tax credit could impact the Trudeau government's new EI parental sharing benefit that will offer more weeks of parental leave for families where both parents take time off to care for a newborn.

Scheer's parental tax credit would increase the cost of this measure by another $24.1 million, the reported estimated.

An official with Scheer's office says internal cost estimates for the tax credit came in at about $900 million a year, which falls in line with the budget watchdog's findings.

It appears unlikely Scheer's tax credit will be adopted. During debate on the bill last month, Liberal and NDP MPs poked holes in the policy, saying it doesn't address the real needs of parents.

"The tax proposal being presented here would not do half of what it promises it would do," said Liberal MP Adam Vaughan.

"It certainly would have very little impact on the most vulnerable families in this country and it would not provide a firm or comprehensive tradeoff that would allow our government to support it."

NDP MP Niki Ashton said she felt the spirit of the bill may be honourable, but since many Canadians are not eligible for parental leave in the first place, many would not benefit.

"We want to be clear that the NDP supports the idea that we need to invest in Canadian families and in new parents, but we disagree with the proposal that has been put forward by the Conservative leader -- a proposal that will increase inequality as it will do nothing to help lower-income families."