As Canadians evaluate child-care promises in the federal election, they may not realize that they are looking at two policies that are already in place in one province: Quebec.
While the Liberals and the NDP pledge to receive $10-a-day child care, explicitly referring to Quebec’s universal child care system as their model, it is less well known that the conservative policy is one from the book. Taking the page beautiful province.
Conservative leader Erin O’Toole’s promise of a refundable child-care tax credit, which will cover up to 75 percent of a family’s annual fees, is similar to Quebec’s own tax credit for families whose children are not in the subsidized childcare space . The credit will replace the current child care expense deduction.
If you have or expect to have children in child care within the next few years, you may be wondering how the two proposals will affect your costs and which one will be more beneficial to your bottom line.
Here’s a look at some of the key aspects of the proposed policies.
Both the Liberals and the NDP have promised childcare, which will cost only $10 a day. Assuming you’re currently paying — or hope to pay soon — non-subsidized fees, $10-a-day of childcare could save you thousands of dollars per year.
In Toronto, parents of infants will save on average about $20,000 per year, according to an analysis by the Canadian Center for Policy Alternatives (CCPA). In Iqaluit, families will see an average savings of over $14,000 annually on infant daycare fees. In the larger cities of BC and Alberta, you’re looking at an average $10,000 reduction in cost.
But one of the questions facing the Canada-wide universal childcare goal is how universal the system will really be, several experts have pointed out.
In Quebec, for example, there are not enough subsidized spots for every child, notes Alex Laurin, director of research at the CD Howe Institute. So for parents to pay the market rate for child care, the province has an income-linked tax credit that covers up to 75 percent of the cost, he says.
Conservatives are proposing a uniform tax credit without a universal child care system. Refundable credit means you will receive money even if you are paying nothing or very little in taxes. And the party’s platform says a Conservative government will pay out the credit all year long, so you don’t have to wait until tax season to get it.
Laurin says the tax credit would be similar to cash transfers, similar to the monthly Canada Child benefit introduced by the Liberals.
The Conservatives say parents will receive up to $6,000 of reimbursement for their annual child-care expenses. Families will be able to claim up to $8,000 of eligible annual expenses per child under the age of seven and up to $5,000 per child between the ages of seven and 15. Canada’s lowest-income households will cover up to 75 percent of those costs, and as incomes rise, the percentage will drop to at least 26 percent.
in one Analysis According to the Conservatives proposal, economists Gillian Pettit, Lindsey Teds and Tammy Shirley found that families with a net income of less than $36,570 would be eligible to receive 75 percent of their eligible childcare expenses, up to an annual maximum of $6,000.
At higher income levels, the amount you can receive shrinks. For example, with after-tax income between $55,535 and $100,225, you can cover 60 percent of expenses, up to $4,800 per year, according to the paper. For a net income between $100,225 and $143,884, families would receive 57 percent of their childcare expenses with their benefits up to a maximum of $4,560.
“At the top limit, households with a net income of more than $162,975 would receive 26 percent of their childcare expenses, up to a maximum benefit of $2,080. There does not appear to be an upper limit regarding income eligibility: all households that pay childcare expenses do, they will receive some amount of the proposed (tax credit), ”the author writes.
The tax credit is “mostly targeted at low-income households,” Laurin says. “But obviously, high-income families will not suffer,” he says, as they will also see a reduction in costs.
On the other hand, Petit, Teds, and Shirley found that tax credits would result in larger cost reductions for low-income families, yet they would be able to use a higher proportion of their income for child care than higher-income parents. will pay
For example, in Calgary, where the typical annual cost of childcare for one child is $15,600, the subsidy will reduce the cost to $9,600 per year for a family with a net income of $20,000 that is eligible for a maximum credit of $6,000 per year. shows. Daycare fees would still eat up 48 percent of the family’s income, the authors note. By comparison, a family with a net income of $60,000 would receive $4,800 and would be left to pay childcare bills of $10,800 per year, equivalent to about 18 percent of their income.
Conservative tax credits would only “nibble” on the problem of affordability, writing Gordon Cleveland, Professor Emeritus of Economics at the University of Toronto Scarborough, who is a member of the expert panel on child care established by the Trudeau Gov.
“Many families find that 20 per cent or more of their after-tax income is still too much to pay. On the other hand, the Trudeau plan of $10-a-day, backed by Singh, will make licensed child care more affordable for all families using it,” he adds.
On the other hand, the $10-a-day model would also subsidize childcare for high-income families who can afford it, notes Laurin.
Another thing to consider is the implementation of how the two plans will affect your bottom line. Will the policies really reduce costs as they promise and how long will it take to implement them?