Income splitting looms as next big child-care policy battle

Tim Naumetz - CanWest News Service - Monday, January 29, 2007

OTTAWA -- The new frontier in the battle over child care begins this week in Parliament's venerable West Block, the dust still swirling from the fight over $100-a-month payments for children under six.

The new fight goes by a different name - income splitting. But the front lines have the same armies that went toe-to-toe over the choice between a national child-care plan and universal allowances in the last election campaign. Traditional stay-at-home parents on one side, advocates for publicly funded care and learning on the other.

In the thick of the fray is Garth Turner, the firebrand Independent MP who led the charge for splitting pension incomes last fall.

"Yeah, this is my fault," Turner said as he explained his latest assault on Finance Minister Jim Flaherty's budget-planning. The former Conservative is officially hosting Tuesday's conference on income splitting, but he has a small and formidable cadre of supporters drawing participants from across Canada.

On the surface, Turner's latest campaign looks only like tax reform.

He wants the federal government to allow all families to split their salaries for tax purposes, the same break he wrested from Flaherty last year for pensioners.

If one of the spouses earns $50,000, for instance, and the other stays home with the kids, the income earner could assign a portion to the spouse at home. That would drop the primary income to a lower tax bracket and leave the family with more disposable income even after tax is paid by the second spouse.

The same would apply to families with two incomes. A spouse earning, say, $90,000 could assign part of their income, splitting it, to the spouse earning only $30,000 or $40,000. The family would again net more after taxes, even with the increase in income by the second spouse.

The goal, says Turner, is to level the playing field between one-income families and two-income families. He says two working parents pay less in income tax because more individual deductions are available, though a 1999 parliamentary committee argued other costs for families with two working parents tip the scales the other way.

"It's time we had a family tax return," Turner argues, pointing to European countries where income-sharing has been extended even to dependent children, or the United States, where joint family tax returns have been available for years.

Below the surface are the forces that lined up in the debate over the Conservative child payments - Real Women of Canada, Home By Choice, Kids First Canada and an entire division of like-minded activists.

A 34-year-old Kemptville, Ont., woman with three kids at home and a husband commuting to a computer job in Ottawa is the chief organizer for the Parliament Hill conference Turner hosts Tuesday.

Sara Landriault, national coordinator of Care of the Child Coalition, says spouses who care for children at home, the vast majority being women, should be paid through the tax system for their work.

An e-mail guerrilla who blogs for her cause, Landriault has crossed Internet swords with several leading opponents and mounted a running campaign lobbying politicians of all stripes: "I'll solicit them all, not just Conservatives."

She acknowledges a sobering fact Turner himself discovered in a research paper he commissioned from the Library of Parliament. Though he calls the income-splitting scheme a tax reform for the middle class, the library document shows it is actually the upper - maybe upper-upper - classes that would benefit most.

"Sure, they pay more taxes, they're going to get more of it back," says Landriault.

And that doesn't even take into account lone-parent families, the majority of whom are headed by a woman and many of whom live below the poverty line, says Martha Friendly, one of Landriault's staunchest opponents and co-ordinator of the Childcare Resource and Research Unit at the University of Toronto.

"Low-income single mothers, they don't get anything out of this," says Friendly, noting with apprehension that Turner's own research shows the move would take $5 billion out of federal revenues when it's combined with income-splitting for pensioners. "It's cutting taxes for people who have more money."

Turner says the option would have to be available to families with no children. That, opponents say, could make it even more attractive than the universal child payment for an election campaign, this year or next.

Ottawa Citizen