1 of 1 2 of 1

Prime Minister Stephen Harper’s proposed income-splitting tax measure doesn’t offer much to lower-income families, argues a University of Victoria expert.

“It sounds like it’s helping lower-middle-class people, maybe, but it’s not,” said Elisabeth Gugl, an assistant professor of economics at the university.

“The benefit certainly increases with the amount of income you have in your household,” Gugl said.

Today (March 28) Harper announced the plan, which would allow families with children younger than 18 years old to divide their income between parents when doing taxes.

Under the proposal, up to $50,000 of an eligible family’s annual household earnings could be transferred from one partner to the other with the aim of bumping their income into a lower tax bracket.

Harper’s Conservative party says the plan is intended to increase fairness in the Canadian tax system.

The party claims families are not treated equally under the tax system in some cases where they have identical levels of household income.

For example, a single-income family earning $70,000 a year pays around $2,000 more in federal taxes than a household where two parents each earn $35,000, the party says.

It is projected the Family Tax Cut plan would lower taxes by $1,300 on average for around 1.8 million households.

But Gugl, the University of Victoria professor, questioned what benefit the income-splitting measure would provide to lower-income families.

“If you have two-earner families where they’re both making fairly similar amounts of income then there’s no benefit whatsoever,” she told the Straight by phone.

“It’s certainly targeted to the higher-, single-earner families who benefit the most. You wonder whether these are the people who should be getting all those benefits, right?”

For example, Gugl said, a two-parent family that earns $80,000 from a single income is already “better off” than a family with the same number of children and two parents earning $40,000 each.

She explained that the family with two working parents likely doesn’t have the benefit of a stay-at-home spouse who can provide household support like childcare.

Gugl also said families with income-earning parents who are already in the lowest tax bracket “wouldn’t be impacted at all” by the tax measure.

Harper unveiled the tax proposal today during a federal election campaign stop on southern Vancouver Island.

He promised to introduce the measure if re-elected and once the federal deficit is eliminated.

“Since taking office in 2006, our government has consistently lowered taxes on Canadian families so that they can keep more of their hard-earned money and have the financial security to raise their children and plan for the future,” Harper said in a news release.

“Thanks to our low-tax plan, the average Canadian family is already paying $3,000 less in taxes each and every year,” he said.

It’s estimated the tax initiative would cost the government $2.5 billion per year.

The plan was quickly criticized by the federal New Democratic and Liberal parties, the Toronto Sun reports.

“Our families here in Canada need help right now, and this policy announcement of Mr. Harper shows he doesn't understand that,” said NDP Leader Jack Layton, the Toronto Sun reports.

“He thinks that people can wait on a wing and a prayer, that maybe they'll get some help some day,” Layton said.

Harper’s minority government fell last week after losing a nonconfidence vote in the House of Commons.

Canadian voters head to the polls on May 2 to cast ballots in the country’s 41st general election.