Ignatieff’s First Slip
Ignatieff made an announcement in todays campaigning, and he of course calls it “revolutionary” (I guess he borrowed Steve Jobs’ speechwriter).
So, the idea is that student’s will now get $1000 RESP a year, which will replace the current education and textbook tax credit. Now, technically speaking it is an increase. With the education/text book credit, you get $400 for every month for education and $65/month for textbooks as a non-refundable tax credit. At the normal 8 months, that $3720, which at the non-refundable tax rate of 15% works out to $558. So, technically it’s $442 more.
That’s about the only good news for Iggy though. The first problem is that the new credit comes as an RESP, and the old one is at taxes. For students, that means that you’re going to have to pay more income tax at each paycheque or pay extra at tax time. For someone like me who’s currently working, this means I’m going to have to contact my HR department and have them deduct more income tax to make up for the fact that I’ll have less credits (almost $4000 less credits, which for me is 2 paycheques worth). This is already becoming a headache.
Secondly is the idea that the old system is a tax credit. That means you have to actually make money above the basic personal exemption (~$10,000 federally) to actually claim it. Which means that you actually have to be a productive member of society. In fact, the people who will be able to take the most advantage of the new credit is people who don’t work. So that means rich people and slackers, not the poor people Iggy claims this will help.
Thirdly is the problem with the limit. Iggy’s promising $1000/yr for 4 years, for a max of $4000. Iggy is trying not to, but he’s wearing his professor hat. And although the image people are trying their best, it gives him that Ivory Tower elitist feeling. The idea of the 4 year degree is disappearing. Especially in Engineering you see people stretching out to 5 or 6 years, because it helps people not to go completely insane. For those people, they now get the short end of the stick as the credits dry up after 4 years. The worst part of this idea is for people who go into graduate school. Using the classic example, these are the people who are going to cure cancer. And they’re getting told that they don’t get anything anymore. You’d think this would come from someone who would want to promote private research above public, but in this case it’s the Liberals, so I’m thinking that this was not well thought out (no surprise there, it’s an election).
Fourthly is that this is going to hurt parents. One of the best parts about sending kids to university is that they are able to transfer (to a maximum of $5000 a year) credits to their parents. It’s almost a scam really. It’s one of the ways parents get to enjoy some benefits of the kids going to university. And under Iggy’s plan, it’s gone. The transfer happens on schedule 11 of the income tax form, and with no tax credit there’s no more transfers.
Revolutionary? Maybe the same way we call it the Iranian “Revolution”, as in things getting worse. This is a loosing proposition. So why will people like it? The same reason people like it when the GST gets cut. Every economist in the country called it a dumb idea, but people love it. Because people want things now now now, not sometime later. We live in an instant gratification society; it’s no surprise that Iggy would try to exploit that.
Tags: election 11
You can comment below, or link to this permanent URL from your own site.
