#Canadaproblems: How should the Harper government spend $3 billion?

Andy Radia
Politics Reporter
Canada Politics

The United States is projecting a deficit of about $600 billion.

In the U.K., their government intends to run a deficit until 2018-19.

Meanwhile, in Canada, the media seems obsessed, this week, with how the government should spend between $2.5 and $3 billion from a projected surplus of $6.4 billion.

As has been widely reported this week, it looks like the Harper government appears to be moving away from a $2.5 billion 2011 campaign commitment to allow spousal income splitting for tax purposes once the budget was balanced in 2015.

So, if not income splitting, what should the Tories do with that $2.5 billion?

There are a lot of folks offering Finance Minister Jim Flaherty and Prime Minister Stephen Harper advice from both inside and outside the Tory caucus.

The Canadian Taxpayers Federation wants the fiscally conservative Conservatives to be , well, conservative with that money.

"The challenge facing all parties and leaders now is to return the projected $30 billion surplus [over the next five years] to Canadian taxpayers and...reversing EI payroll tax hikes," CTF Executive Director Gregory Thomas said in a press release earlier this week.

[ Related: Speculation about Jim Flaherty's future heats up ]

The left-leaning Broadbent Institute is pleased that the Harper government is souring on income splitting.

They point to research that suggests that program would have cost the economy $3 billion (see graphic below). They'd rather see that money go to mothers and fathers of newborns.

"We're happy the government appears to be second-guessing this expensive tax giveaway to the wealthy that would have worsened income and gender inequality," their Executive Director, Rick Smith," told Yahoo Canada News.

"The $3 billion that income splitting will drain from federal coffers would be better spent doubling benefits for maternity and parental leave that most families take advantage of, and which only pays an average of $388 a week."

[ More Politics: Dufour-Lapointe sisters pushed into middle of Quebec/Canada political debate ]

As for the Harper government, it looks like they might actually allocate more money for families.

According to the National Post's John Ivison, the Tories are considering using their surplus to enhance the Universal Child Care Benefit.

"[Harper and Flaherty] are of the same mind — income splitting is dead and the $2.5-billion earmarked for the tax cut would be better spent extending the universal child care benefit that gives $100 a month to families with children under six," Ivison, who is very-well connected with Tory insiders, wrote in a column published on Friday.

"The Conservatives spent $2.7-billion last year, giving each family $100 a month for each child under six. The child care benefit helps all income classes and is popular among supporters of all parties, even the NDP. The suggestion is that the Conservatives will commit to spending the $2.5-billion saved by not establishing the Family Tax Cut on an extension of the universal child care benefit that would see children older than six covered too."

Ivison's theory makes sense: Handing out hundreds of dollars to the millions of households with children should pay huge dividends on Election Day.

[ Related: Debate over wisdom of income splitting extends beyond Tory caucus ]

There are other options of course: more money for transit, education, health care, homelessness, affordable housing.

But isn't this a great problem to have?

Certainly, the government should absolutely come clean with what they intend to do with the income splitting promise and they shouldn't be playing politics with taxpayer dollars.

But would you rather be living in the U.S right now? In Europe?

$2.5 billion burning a hole in our collective pockets isn't such a bad thing.

(Photo courtesy of the Canadian Press)

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