Harper promises tax cut for families- but not until 2015-16

SAANICH, B.C. — The Conservatives will allow Canadian families with children under 18 to split up to $50,000 of their income annually to lower their taxes, Prime Minister Stephen Harper announced Monday.

The tax-saving measure, the first of the Tories' new promises in this election, was made by Harper on the third day of the campaign.

The initiative would cost the federal treasury $2.5 billion annually, but won't take effect until the federal government balances its books — which now isn't expected to take effect until 2015-16, perhaps a year earlier if the Tories are able to cut program costs throughout the government.

Harper said the new "Family Tax Cut" will apply to parents with children under 18 and will provide "significant tax relief" to nearly 1.8 million Canadian families who will save an average of $1,300 per year.

He added that the tax cut will make the income-tax system fairer and will reduce tax bills for families. "We understand that family budgets are stretched and by making the tax system fairer for families, we will make it easier for parents to cover the day-to-day cost of raising their kids."

The Conservatives said that under the current system, couples with the same number of children and the same household income are not treated equally. A two-income couple in which one spouse earns more than the other pays more federal income tax than a two-income couple in which the two spouses earn equal amounts.

Moreover, a single-income couple pays even more, the Tories say.

To highlight the unfairness, the Conservatives gave examples:

- Two parents earning $60,000 and $20,000 respectively pay almost $1,300 more in federal taxes than two parents in an identical household, each earning $40,000.

- A two-parent family in which one spouse is earning $70,000 and the other is staying at home to raise children now pays almost $2,000 more in federal taxes than two parents earning $35,000 each in an identical household.

The promise to allow income-sharing for families with children is similar to another tax measure the Tories gave to pensioners, when they allowed them in 2007 to start splitting their incomes for tax purposes.

The Conservatives said they have already provided tax breaks for families through other measures, including: cutting the GST; establishing a child-care benefit; and creating a fitness tax credit for children in sports.

"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.

Canadians will vote in a federal election on May 2.