Little wiggle room left by Tories

Submitted by
Ken Boshcoff M.P.

The Conservative government is vowing to kill a private member’s bill that would give tax cuts to parents who save for their children’s post-secondary education.
The Liberal bill would treat Canada’s Registered Education Savings Plan more like RRSPs allowing parents to contribute up to $5,000 annually to an RESP for each child and deduct the amount contributed from their income taxes.
Essentially, contributors who pay taxes at a rate of 35 per cent, a $5,000 RESP contribution would save them $1,750 on taxes. The Conservatives have said they won’t let the bill become law.
Under the bill, contributions would eventually be taxed when they are withdrawn. But they would be taxed at the student’s income tax rate, not the contributors’, which should make the tax paid minimal.
Should the money be withdrawn for any reason other than education, or by the person who contributed, much higher tax penalties would apply. Under current RESP rules, Canadians can contribute to education savings plans and have the money grow tax free. The federal government also matches 20 per cent of contributions, up to $7,500, through a program called the Canada Education Savings Grant (CESG). But that tops out at $500 annually, per child.
The chance to avoid paying income tax on up to $5,000 per year, per child, should make the program more enticing to Canadians. Currently, only 30 per cent of parents are taking advantage of the existing system, which penalizes those who are middle-income families. This vehicle helps Canadians achieve the dream of ensuring that your children get higher education.
But the Conservatives have once again turned their backs on Canadian students by unanimously voting against the bill claiming the expenditure could put the country into deficit territory. After years of mega-surpluses, this government has nearly bankrupted us with their $25 Billion spending spree that leaves little fiscal room to support working Canadian parents in saving for the education of their children.