Article Summary
The Incredible Shrinking $1,200 Child Care Allowance: How to Fix It
Public Policy Paper by Anne MakhoulThe debate on the Child Care Allowance revealed a clash of philosophies, that of cash-to-parents versus cash-to-provinces. Ideological debate aside, Ken Battle posits the $1,200 Child Care Allowance has significant design flaws that will negatively impact families of different types and incomes. This paper elaborates on the Caledon Institute’s first critique of the Conservatives’ proposal and explores ways to fix the flaws before it is launched. This new plan will replace Canada’s Child Tax Benefit (CCTB).
Battle identifies three reasons why the Child Care Allowance will be worth less than the stipulated $1,200. First, since it is a taxable benefit, only those families with the most modest incomes will be exempt. Second, if the Child Care Allowance is included in a family’s net income, it will reduce their benefits from federal and provincial geared-to-income programs such as those related to child tax benefits and GST. Third, the Child Care Allowance will replace the Child Tax Benefit’s young child supplement.
Battle identifies several problems with the Child Care Allowance: it is unfair to single parents and two-earner couples; it could raise the welfare wall; it inadequately recognizes child-care costs; its “demand-side” philosophy will not increase the supply of quality child care spaces; the federal government is intruding into provincial/territorial social and fiscal policy; and it could halt decades of progress toward a fair and effective child credit.
According to Battle, several options exist to fix the flaws in the Child Care Allowance. He suggests the federal government should not eliminate the $249 young child supplement that is part of the Child Tax Benefit. The Allowance could be exempt from calculating a family’s net income and could be designed as a universal, non-taxable benefit. He also suggests it could also be delivered through the exiting Child Tax Benefit. Battle recommends preserving the $249 supplement and administering the allowance through the Canada Child Tax Benefit.
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Policy Publication Details
| Author(s): | Anne Makhoul; | ||
| Publisher: | Caledon Institute of Social Policy [ Visit Website ] | ||
| Year Published: | 2006; | Publisher Type: | Research Institute |
| Publicly Available: | Yes | Research Focus: | Municipal; |
| Registration Required: | No | Language: | English |
| Payment Required: | No | Publication Format: | Adobe PDF |
Subjects / Categories:
Policy Articles / Children & Family / Daycare & Childcare
Policy Articles / Fiscal & Budgetary / Tax Policy
Policy Articles / Children & Family
Policy Articles / Fiscal & Budgetary
Policy Articles / Children & Family / Daycare & Childcare / 2006
Policy Articles / Fiscal & Budgetary / Tax Policy / 2006
Keywords / Tags:
Child Care Allowance; cash-to-parents; cash-to-provinces; Canada; Child Tax Benefit; GST; young child supplement; two-earner couples; quality child care spaces; welfare wall; fair child credit; municipal social and fiscal policy; provincial social and fiscal policy;