OTTAWA—With an election on the horizon, Prime Minister Stephen Harper’s government is moving to put more money in the pockets of Canadians through a $3-billion boost in family tax breaks.

The overhaul of family taxation, announced by Harper in a mini-budget at a campaign-style event in Vaughan, includes a limited form of income-splitting, increased monthly baby bonus payments and an expansion of the tax deduction parents can claim for child care expenses.

The new Family Tax Cut, a major shift that will allow couples with children to reduce what they owe Ottawa by sharing income for tax purposes, is being made applicable to the 2014 tax year. This means a couple could save up to $2,000 when income tax returns are filed next spring.

And the enrichment of the Universal Child Care Benefit is being phased in so that families with a child under age 6 will receive a cheque from Ottawa for an extra $360 next July, several months before Canadians are expected to go to the polls in a federal election.

“We are keeping the promises we made to Canadian families,” Harper said Thursday. “And in addition to that, we are still on track to balance our budget in 2015.”

During the 2011 election, Harper promised to introduce several big-ticket tax breaks once the Conservatives eliminated the $24.9 budget deficit. But the tax changes had to be put off as the deficit persisted through this year.

The most controversial measure announced Thursday is the income-splitting measure being called the Family Tax Cut. It will particularly benefit families with children under age 18 where only one spouse works or where one spouse earns significantly more than his or her partner.

Under this measure, the couple could lower combined income taxes by shifting up to $50,000 of taxable income to the spouse in the lower income tax bracket. Income-splitting is popular among many Conservatives but it has been widely slammed, with critics saying the bulk of the benefits would go to high-income earners while most Canadians would benefit not at all. Even former finance minister Jim Flaherty questioned its fairness.

In response, the government is capping the benefit of the tax break to $2,000 a year per couple. It will cost Ottawa $2.4 billion annually in foregone revenue.

“Concerns have been expressed that too much of the benefit of that would go at very high income levels,” Harper acknowledged. “So that’s why we limited the benefit under this and also expanded other benefits to Canadian families to make sure that all Canadians across the income spectrum benefit from these measures.”

But NDP finance critic Nathan Cullen condemned the tax moves as “incredibly expensive and unfair,” saying the income-splitting provisions would do nothing for single parents or parents with similar incomes.

Also, Prime Minister Stephen Harper announced an increase in the Child Care Tax Deduction, as of 2015, to $8,000 from $7,000 per child under age 7. For children age 7 through 16, it will rise to $5,000 from $4,000.

As part of this overhaul, the government will as of 2015 scrap the standard Child Tax Credit, a change that will add $400 million to federal coffers in 2014-15 and $1.8 billion in 2015-16.

Overall, the new measures will cost the federal government $3 billion a year. Benefits are expected to go to 4 million families with children, according to the finance department.

Harper, who unveiled the new measures in Vaughan, has been rolling out tax breaks in recent weeks in anticipation of Ottawa balancing its books next year for the first time in half a decade. Some of the new tax goodies will land in the hands of Canadians in advance of the election expected in late 2015.

Income-splitting has been widely slammed as a giveaway for high-income earners in families with one working spouse. A study by the C.D. Howe Institute concluded that 80 per cent of families would see no benefits from income-splitting.

Former finance minister Jim Flaherty raised questions about the wisdom of income splitting, saying he wasn’t sure it would be of overall benefit to Canadian society. Speculation at the time focused on a possible rethinking of the measure by the Conservatives, but Tory MPs reportedly voiced renewed support for the idea, especially since scrapping it would mean backing away from a key 2011 campaign promise.

“We’re opposed to this plan because it would cost too much and not impact the vast majority of those that need the help,” Cullen told a news conference.

And he suggested next year’s federal election was the main motivation in the voter-friendly measures rolled out by Harper. “It’s all political and not economics,” Cullen said.

Harper also announced Ottawa is increasing the Universal Child Care Benefit (UCCB) and the Child Care Tax Deduction.

But, as part of this overhaul, the government beginning in 2015 will scrap the standard Child Tax Credit at a savings of $400 million in the 2014-15 fiscal year and $1.8 billion in 2015-16.

Overall, the new measures will cost the federal government $3 billion in the current 2014-15 fiscal year. It rises to $4.9 billion in the following year. Benefits are expected to go to 4 million families with children, according to the finance department. The government also said more families will benefit by substituting an enlarged UCCB for the Child Tax Credit. Low-income families who owed no taxes did not benefit from the Child Tax Credit, whereas the UCCB goes to all families with children, the government said.

The new tax measures were roundly criticized by child-care experts and anti-poverty activists.

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Martha Friendly, executive director of the Childcare Resource and Research Unit, called it “an outrageous way to spend money.

“Just like the old baby bonus, the UCCB is nothing more than a symbolic recognition of the role of child rearing,” she said. “It’s not enough money to make any difference or to give parents any kind of choice in child care.”

Laurel Rothman of Campaign 2000, a national coalition fighting to end child poverty, said boosting the National Child Benefit and Supplement, which provides funds to low-income families with children, would be a far better option.

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