A $7 a day program translates into a cost of $140 a month per child for childcare for the average 20-day work week. This is a significant savings for most families, as the average Ontario family pays $603 a month per child for daycare. (Source: Globe and Mail). A family with a preschool age children would save $463 a month if this plan was ever put in place.
The Conservative Party, on the other hand, has devoted themselves to saving parents money by reducing tax rates. In 2004, federal tax rates are as follows:
- A Federal Basic Amount (Exemption) of $8,012
- First $35,000 in income - 16% tax rate
- Over $35,000 up to $70,000 - 22% tax rate
- Over $70,000 up to $113,804 - 26% tax rate
- Over $113,804 - 29% tax rate
Can the Conservatives (or any other party) cut taxes enough to make tax cuts preferrable to a national day care program for families with a preschool age child? If the Liberals can put a $7-a-day child care plan into place, an Ontario family would save $5556 a year if their child spent 12 months in day care. On the first $35,000 of taxable income, a family must pay 16% of that income, for a tax bill of $5600. For a low or medium-income family to be better off, the Federal government would have to expect an additional $35,000 from taxation. Even with all the other sources of tax revenues such as sales taxes, sin taxes, CPP and EI contributions, user fees, and tarriffs, it is incredibly unlikely that any federal government would be willing to implement such a radical tax cut.
Because of the cost of day care, some observers also believe that most governments will be unwilling to enact a childcare program into law. The Liberals have promised to spend $5 billion over 5 years for such a program. If the provinces match these contributions, this will provide an average of $2 billion a year for providing child care. However, if it costs the government $5,000 per year for each preschool age student, this would only allow the government to fund 400,000 spots. This is a particularly low number when you consider that there were over 328,000 babies born in the year 2002 and children often attend preschool for several years.
A $7-a-day childcare program would be a boon to lower and middle-income families, as it will save them thousands of dollars a year in child care expenses. Implementing such a plan appears difficult however, given the number of children under 6 in Canada, the high cost of providing a year's worth of child care, and the cost of competing social priorities such as health care and education. Ultimately the voters will decide if Liberal promises of a child care program are credible.
If you'd like to ask a question about politics, taxes, or any other topic or comment on this story, please use the feedback form.
