Conservatives: "Gettin Things Done"...

In the parlance of the Conservative government, they keep claiming to be "getting things done" for Canadians, but every time I turn around I keep finding that what they are "getting done" is much different from what they claim.

The latest chapter in this track record of "not quite getting it done" comes to us in the form of The Children's Fitness Tax Credit. While the Dept of Finance press release above is the usual ego stroking nonsense we expect from our politicians, I suspect that a lot of people haven't looked at the rules too closely.

While the tax credit sounds good initially - after all $500/child/year isn't chicken feed. For a lot of families, that's anywhere from $1000-$2000 taken off their income tax, right?

So...I started to investigate further. While the definition of programs presented in the news release is quite broad, I wonder just how the government is going to keep track of "qualifying" programs. Without some kind of tracking, it seems to me that this program is as ripe for exploitation as the now-infamous "Sponsorship Program".

A further look around at the Canada Revenue Agency website turns up the real rules that you must abide by when submitting your tax returns.

The first notable wart appears with the rules around how the credit is applied:

The proposed children's fitness tax credit will allow parents to claim a maximum of $500 per year for eligible fees paid for each child who is under 16 at any time during the year. As with most other non-refundable tax credits, the credit is calculated by multiplying the eligible amount by the lowest marginal tax rate (15.5% in 2007).

Oh - so, looking at the example that the CRA puts forward:

Example:
Mary registered her three children, Julie (9 years old), Samantha (10 years old), and Eric (15 years old) in an eligible program of physical activity and paid fees of $750 for each child on January 16, 2007. To calculate the amount that she can deduct from her taxes owing on her 2007 income tax return, she uses the following formula:

Step 1:
$500 (maximum allowable amount per child)

x 3
(number of children enrolled in an eligible program of physical activity)
$1,500 (total allowable amount eligible for the tax credit)

Step 2:
$1,500 (total allowable amount eligible for the tax credit)

x 15.5%
(lowest marginal tax rate for 2007)
$232.50 (total amount that can be used to reduce the taxes owing on Mary's 2007 income tax return)

Oh, now I see. An expenditure of $1500 results in a $232.50 reduction in the taxes owing.

The rules for what can be claimed in the 2007 taxation year are, well, baroque to say the least. (They're all there on the CRA website), and a lot of people are going to have a rude awakening come tax time.

I see two significant problems with this program. First off, it assumes that the parents have the available funds to enroll their children in some kind of organized sports activity. As we all know, this is not necessarily true; and perhaps more worrisome is the oft-reported fact that physical health among the poor is often much worse than among the wealthier for precisely this reason. The Conservative Tax Credit does little to address this, instead providing limited benefit at all, reserved purely for those who have the spare dollars to enroll their children.

Like the GST cuts, and the "Child Care Allowance" programs, the only people that really benefit are those with significant disposable incomes already. These people already have their children's lives booked fifteen ways to Sunday with activities - and a $200 tap on their income taxes, while no doubt appreciated, isn't a huge amount. The government could have accomplished a great deal more by increasing funding to physical education programs in our schools.

Instead, they have created another Frankenstein program that will either have no validation of the submissions, or if there is any attempt to track and audit the validity of the programs claimed it will rapidly turn into a bureaucracy of its own that will make the costs of the oft-criticized long gun registry.

Yep, they're sure "getting things done"...