Now that the Conservatives have won a long-coveted majority, what pocket book measures can Canadians expect from the new Government? The Election Platform put out by the Conservatives contains the following key proposals (the * represents proposals that will be implemented when the federal budget is balanced):

Children’s Arts Tax Credit: A $500 credit per child for participation in eligible arts or cultural activities. The Arts Credit was included in Budget 2011 and it is a good bet that we’ll see it in the first budget, so be sure to file those receipts away.

Family Caregiver Tax Credit: A $2,000 tax credit to support caregivers of infirm dependants.

Guaranteed Income Supplement Top-up: Extra GIS transfers of up to $600 for single seniors and $840 for senior couples.

Family Tax Cut*: Allow families with children to share up to $50,000 of household income for federal income-tax purposes.

Children’s Fitness Tax Credit*: Double the value of the tax credit for physical activities from $500 to $1,000 and make it refundable.

Adult Fitness Tax Credit*: A $500 tax credit towards fitness activities for adults.

Doubling the Tax-Free Savings Account Limit*: Annual TFSA contribution limit will be boosted from the current $5,000 to $10,000.

No Changes to the Canada Pension Plan: The Conservatives will instead implement a Pooled Retirement Pension Plan.

Most of the pocket book proposals coming out of the new Government in its first few years of office are likely to be very modest. The Conservative record on election promises is somewhat mixed. While they cut the GST and sent out “beer and popcorn” cheques, they also taxed income trusts and did not fully implement a capital gains exemption.

PS: I’m delighted that this blog has yet again been included in The Globe & Mail’s list of the best of the money blogs. Many thanks to Kerry Taylor (aka Squawk Fox) and Rob Carrick for the nomination.

This article has 29 comments

  1. Good summary of the potential offerings.

    I really wish they would dispense with the small fiddly stuff and just do simpler changes like lowering the tax rates a tiny bit.

    That adult fitness credit will be a nightmare – a lot of fitness activities are somewhat informal – pickup hockey, casual sports leagues. I don’t know if they will qualify, but it won’t be fun for the organizers if they do.

  2. Congratulations on being included in The Globe & Mail’s list of the best of the money blogs!!

    That’s an excellent summary of what to expect. However I’m waiting to see what they actually do as oppsoed to what they promise. 🙂

  3. TFSA won’t happen under their current term. 2015 is when they expect to balance the budget and this carrot won’t be hung on the end of the proverbial stick until the next election.

  4. I think Canadians need to write to their local politicians, different cabinet members plus Stephen Harper to ask for what we want. There is too much complaining and not enough action. The politicians do read and reply to your letters. Some of the Conservatives list of items should happen and now and not when the budget is balanced. I think the fitness items should happen now because these will save Canada money down the line.

  5. I agree with Mike Holman — the adult sports credit, children’s art lessons credit, public transit monthly pass credit, etc. are just social engineering in disguise. It makes no sense that a person who runs on a treadmill at a gym gets a tax credit for doing so, while a person who runs outdoors does not. A person who buys a monthly transit pass and rides the bus 20 times gets a tax credit, while a person who buys tickets and rides the bus 20 times does not. It makes no sense. Just cut income taxes and let people do what they want with the savings.

  6. @Mike: I totally agree. The Conservatives say they have introduced 120 tax cuts. Why not just 1 tax cut that on averages equates to those 120? With all the new tax credits in their platform, it’s only going to get worse.

    @Kanwal Sarai: I think the Conservatives will implement many of these promises. Of course, if the budget remains in deficit they can cop out saying their conditions were not satisfied.

    @Sustainable PF: I think so too. Other economists think the Conservative plan for balancing the budget is too aggressive. So, the TFSA boost may not happen before October 2015.

    @Lee B: I’m not all that thrilled with these tax credits. I’d rather take a small income tax cut instead.

    @Joe Q.: I agree. Another problem is that these credits don’t actually encourage anything. Most people are not going to get a bus pass just because they’ll be getting a tax credit. Parents are going to enroll their kids in arts and sports regardless of a tax credit. All these tax credits do is throw a few dollars at taxpayers and create mountains of paperwork.

  7. You forgot to mention the Home Renovation Tax Credit being renewed, which is the one I’m waiting for before getting my roof fixed… If it doesn’t go through, I’ll just delay the work some more – the usual bribing us with our own money as you say.

    I will spare you my usual diatribe about targeted tax cuts and the uselessness of promising to do something only when the budget is balanced. The PM has lied on so many other campaign promises that I’m not holding my breath on anything.

  8. Of course, there’s also the minor issue that no federal Conservative government has ever run a balanced budget. I’ll believe the TFSA increase, family income splitting, and fitness credits when I see them.

    If a party really was serious about balancing the budget, they’d do what most economists recommend which is raise the GST and cut personal taxes, giving people more money in their pockets and letting them decide how they want to spend it. Of course, since that’s political suicide I won’t be holding my breath on that one either.

  9. Our income taxes are wy too high.Each election cost us over $300.000.00

    The jets to bomb Libya were out of this world

    The G-20 and G-8 over a billion $ for twoo days .

    Am I the only one who thinks our taxes are too high ?

  10. I meant to say 300,000,000.00 $

  11. @MRED – You may be confusing revenues with expenses… the issue of wasteful spending is separate from that of high tax rates.

  12. Ben B; I must respectfully disagree with yopur statem,ent.

    For without high taxation there wouldnt be wasteful spending and of course thats what we have today, an unlimited supply of resources that the governments of all stripes , whoever is in power ? fritters away , not because its necessary but because they CAN~!
    There is no distinction between wasteful spending and high taxation without the excessive taxation that we are being subjected to (by force)( extortion )

    If our governments can aford wasteful spending ? its time to cut the income taxes and HST.

    Just think what generous tax cuts would do for our economy.

    People would spend MORE! thereby bringing in the same amount dollar wise of taxes and the whole economy would boom

    Singapore is a prime example of low taxation and a booming economy

  13. I’m all for the adult tax credit, writing off my gym membership is nice thing.

  14. @MRED – I think it is possible to have wasteful spending irrespective of the tax rate, if governments spent within their means, we wouldn’t have such a large deficit. The US always prides themselves on low tax rates, but their debt is going through the roof. As they have demonstrated over the past few years, cutting their taxes has had no impact on how fast they’re spending money, it’s just a question of where the money’s coming from.

    I do agree however that tax rates are more frustrating when one feels that the money isn’t spent properly, however, I don’t think that means we are necessarily overtaxed overall, just that better decisions could be made as to how those revenues are allocated.

    In the case of Singapore however, I think having their population of 5 million in an area slightly larger than Toronto probably helps. It means that all of the taxes they collect in the form of income tax, GST, and property tax don’t have to be spent on as much infrastructure. When schools, hospitals, and roads don’t have to be funded to serve communities of a couple thousand people, the government can probably afford to cut their revenues through tax cuts.

    However, I suspect that even people who have spent a significant number of years in Singapore can find instances of government spending that they don’t agree with and feel that their taxes could well be a bit lower instead.

  15. We shoudl dispense with arguing about supply side economics. There is no evidence tax-cuts result in increased revenue, and plenty of evidence to the contrary.

    That being said, we need to drop these politically motivated tax expenditures and move towards simplifying the tax system. Your tax return should not be based on the quality of accountant that you can afford.

  16. Personally i’m looking forward to the cat-dog-and-bunny fitness tax credit that’s the logical line item on the next conservative platform.

  17. In response to Nial >

    Since the HST was legalized here in Ontario I have been doing 99% of my shopping in the US where the tax state rate is 8 %

    A lot to be sure but NOT as punitive as 13 %/

    Why do you think I ? , and thousands of other Ontarioans go stateside every weekend to shop/?

    Gasoline alone , is at the very least $1.00-$1.05 a US gallon cheaper there .US or Canadian funds

    A fillup and ten gallons in containers results in savings of 20-30$ every two weeks ,thereby offsetting the price of the bridge toll of $3.25 US$ or Canadian.$

    Never mind all the other items like groceries that are at better prices

    Ink Cartridges; two there for the price of one here, same company.And only 8% tax

    There are many prices much MORE reasonable over there because of the lower tax rate.

    barbecues,garden hoses lawn furniture etc is much cheaper there and the tax is managable.

    I cant imagine the amount of Canadian dollars going across the border every week because of the high taxes here.

    Lower the taxes here and the money would stay here; simple.

  18. I live in Nova Scotia, so I’m pretty familiar with the HST.

    Even without the HST, the price imbalance between Canada and the US would have existed.

    The problems regarding that are much more structural and have little to with the HST, which for the majority of consumer items you would have been paying 13% tax, HST or no HST.

  19. To Nial: no doubt that prices have been seriously less in the US for many years as I have been shopping there since 1963.
    and I am well aware of the price differences on the same goods there as compared to here.

    Our taxes here were 8% federal and 5% provincial but with HST it is 13%

    Not all things were taxed as a conglomerated item;many things avoided the provincial tax and many things avoided the federal tax.Not all items had 13% tax on them very few if I remember corerectly?

    And it is important to note that the CPC bribed the Liberal government of Ontario to implement the HST otherwise they would refuse the province transfer of payments /

    So there you have it we are nothing but slaves to government.

    I still say we are being taxed too much becauser government spends what it getsIf they didnt get ? they couldnt spend without borrowing and that would cause serious backlash

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  22. The upshot is that the only group that will get significant cuts in income tax any time soon are quite high income single-income couples with children. The maximum value of that tax change is over $13,000 for families with one spouse earning over $150k and the other at home.

    TFSA increase will be significant eventually, but it too will skew to high income individuals.

    The benefit of these tax measures are that they sound like they can be used effectively by most people from middle-class on up, but most of the benefit accrues to relatively high income earners

  23. Oh, and I have a suggestion for the Conservatives: I want a tax-preparation tax credit. With all their new credits and rules, tax preparers are going to be an increasingly attractive option for people who don’t want to deal with all the hassle. And we should have a reverse HST on all these things, where the government gives us 15% seemingly at random, but only if we fastidiously compile all of our receipts, records, transit stubs, etc.

  24. MRED: about 65% of the typical consumer’s spend was subject to 13% before HST implementation, and it’s up to about 80-85% now (food, children’s clothes, books, etc. remain HST exempt). The big difference is on gasoline and utilities. For 65% there was no change in tax rate.

    A lot of food is cheaper in the US. I’d watch out for the dairy products and meat. Standards are different between US and Canada in terms of the hormones and antibiotics that can be used in food production.

  25. I somewhat agree with Andrew F`s last statement , actually all three of his statements are pretty well on target.

    And yes, I dont buy diary products of any kind in the US because of the GMBh hormones they feed to dairy cattle . who know what that will do to humans ?

    As far as I remember there were NO federal taxes or was it provincial taxes on services? , like haircuts and any other service industry but now all services are required to charge HST.

    And gasoline has three taxes on it federal ,provincial and HST now.

    There are many products in the US that are much cheaper than they are here and the same products are imported from the US for sale here.

    Over all, my shopping over there over the years has been financially viable , otherwise why bother with a passport and OOPHI?

    As long as I can maintain on the positive side of my budget by shopping there I will.

    Now with the Canadian bucky above par things are even MORE attractive across the line.

    You have to remember that money has no conscience , it will gravitate to where the returns are most productive.

    E.G. millions of dollars go back and forth to the US from Canada each day in securities trades …Why?
    because it is economically profitable to do so.

    The little guy like myself trying to save a few dollars to exist should be allowed the same leeway in where his money goes.

    so ? having said that ? I will continue to spend my money where it is economically profitable to do so and when that ceases,? then it will be time to reasess my lifestyle.

  26. I also agree with Mike Holman. Just give me lowered spending and taxes and strong, sound economy, not pork to every possible constituency.

  27. “TFSA increase will be significant eventually, but it too will skew to high income individuals. ”

    I must respectfully disagree with this statement on its face value?

    AFAIK the TFSA is the best thing to come alomng since sliced bread .

    I am retired and I find it expedient to transfer form my RRIF to my TFSA each January the maximum amount allowed whether it be etf`s, mutual funds, or bonds etc..

    The transfer counts under the dedicated amount I must remove each year from my RRIF. BUT? once the funds are in the TFSA they earn tax free money and it can be removed or returned at will anytime.without penalty.

    I am certainly NOT a higher income earner as I am on pension and RRIF but I sure can see the advantage of this TFSA.

    This is a win-win situation for me a low income retiree.

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