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The Conservatives have been mulling an alternative to spending $2.5-billion on income splitting for a year. When he was finance minister, the late Jim Flaherty poured cold water on the 2011 election promise to allow spouses to share up to $50,000 of income for tax purposes, suggesting that it might not benefit as many people as other measures. One study suggested only 9% of households would benefit more than $500 a year, with most of them being high earners.

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Statistics Canada says there are 5.6 million households with children. The government currently spends $2.7-billion a year giving $100 a month to families with children under six — a popular policy that helps families of all income levels. It is understood the government has been looking at including the 6-12 age group in its enhanced program.

However, when the prospect of dropping income splitting was suggested in caucus, a number of MPs pointed out the need to live up to an election pledge. Insiders suggest it remains a live issue.

“Don’t rule out a targeted amount of income splitting in the budget, as well. The Prime Minister wants to do his best to satisfy everyone with respect to support for families. It’s a big part of delivering promises made in the last election,” said one MP.

Speculation about imminent tax cuts, coupled with promises made by Stephen Harper this week to double the child fitness tax credit, suggests the federal fiscal position is stronger than the government has been letting on.