Canada's Minister of State for Finance Ted Menzies speaks during Question Period in the House of Commons on Parliament Hill in Ottawa October 22, 2012. (REUTERS/Chris Wattie)
OTTAWA — With the federal government no longer expecting to balance its budget before the next election, four key Conservative election goodies are on hold.
The Tories had linked limited income splitting for families, doubling of the child fitness tax credit, a new adult fitness tax credit, and doubling the annual contribution limits to tax-free savings accounts to deficit elimination.
Minister of State for Finance Ted Menzies says tax cuts and credits won't come until the books are balanced.
"We maintain that those are the right policy decisions but we've said all along that when we get back to balance, those decisions will be taken," Menzies said Wednesday.
Finance Minister Jim Flaherty admits the federal budget won't be balanced until 2016-17 — after the next election — because global economic jitters have hurt tax revenue.
So, couples with young or teenage kids hoping to save hundreds of dollars by splitting their incomes and paying lower tax rates won't get to do that in the next few years.
Carleton University economist Ian Lee says that's tough, but he's glad the Tories linked pricey promises to deficit elimination.
"At the time I thought it was very prudent to announce that they would not take effect until the budget was balanced," said Lee.
He says it wouldn't make sense to borrow money in order to push forward with income splitting and other measures because taxpayers would still be on the hook for the accumulated debt.
"I wished that the economy was growing more quickly," said Lee. "I wish that the U.S. economy was growing more quickly because if the economies were growing more quickly they would be throwing off more cash, more tax revenues, and that would allow the deficit to be retired more quickly, but we live in an imperfect world."