Harper Offers Canadian Families Tax Cuts in Bid to Win Majority

March 29 (Bloomberg) -- Prime Minister Stephen Harper targeted his first campaign pledge at Canadian families with children, as he seeks to boost support in a bid to form a majority government.

Harper said yesterday his Conservative Party would let families with children under 18 split up to C$50,000 ($51,250) of their income for tax purposes, which would lower the combined burden for 1.8 million families in a country of 34 million people.

Harper won Canada’s last two elections after promising tax reductions aimed at families, including tax credits tied to the cost of public-transit passes and children’s sports fees, rather than broad-based reductions in income tax rates favored by previous governments. In the budget that opposition parties rejected last week, which preceded the government’s defeat, the Conservatives announced tax credits for children’s arts programs.

“Harper tends to pick the policies that have a clear and obvious benefit,” Jonathan Malloy, associate professor of political science at Carleton University in Ottawa, said in a telephone interview. Allowing couples to split income “could certainly swing some votes, particularly in key suburban areas” and among women, he said.

The Conservatives won 38 percent of the vote in 2008 elections, which gave them 143 seats in the 308-member House of Commons.

After Deficit Eliminated

Income splitting wouldn’t take effect until after the country eliminates its budget deficit, expected by 2015. The measure would cost about C$2.5 billion in foregone revenue a year, Harper said.

“Since coming to office in 2006, our government has placed lower taxes on families among its highest priorities,” Harper said in the backyard of a suburban house near Victoria, British Columbia. He mentioned other initiatives his party has taken, including a monthly C$100 benefit for all children under the age of six, and a C$2,000 tax credit for each child younger than 18 years of age. They also cut the rate of the federal value-added tax, the Goods and Service Tax, from seven percent to five percent.

Liberal leader Michael Ignatieff told reporters the promise can’t be counted on because it wouldn’t occur for five years, adding that the Conservatives are planning to continue tax relief for companies next year.

“It’s like he’s saying to middle-class families: ‘Take a number,’” Ignatieff said yesterday in Toronto. “That’s the policies that you get if you put banks, insurance companies and oil companies first and leave Canadian families at the back of the line.” He did not say whether the Liberals would adopt a similar policy.

‘Cynical Move’

New Democratic Party Leader Jack Layton yesterday said the delay in the tax measure wouldn’t help families dealing with rising bills today.

“This is exactly the sort of cynical move Stephen Harper used to denounce,” Layton said in a statement.

Opposition parties joined together March 25 to topple Harper’s government by passing a no-confidence motion. They rejected Finance Minister Jim Flaherty’s budget last week and said Harper’s government was in “contempt” of Parliament by withholding the cost of some of its legislation, including plans to buy new fighter jets and build prisons. Harper said the election was unnecessary.

Flaherty presented a fiscal plan last week that forecast the government may eliminate the deficit as early as 2014 if it manages to generate savings from a review of program spending that begins this year. The review will aim to save at least C$4 billion annually, according to the March 22 budget document.

‘Wasteful Spending’

Ignatieff said yesterday a Liberal government would halt Harper’s “wasteful” spending on new fighter jets and prisons that will squeeze out money needed in the future to pay for programs such as health care. He said he will present a platform in the next week that will be paid for in part by rolling back past corporate tax cuts.

“We have a great contrast to make between the fiscal responsibility which has been the brand of the Liberal Party, and the wastefulness of the Conservative government,” Ignatieff said.

Today, Ignatieff will be in Oakville, Ontario, about 25 miles southwest of Toronto, then fly to British Columbia. Harper will begin campaigning in Regina, Saskatchewan.

To contact the reporters on this story: Theophilos Argitis in Toronto at targitis@bloomberg.net; Greg Quinn in Ottawa at gquinn1@bloomberg.net.

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.