Tories look for Senate allies to crush RESP bill

This is from the Star. Among other articles on the same issue is one in the National Post headlined: "The Liberals hit the political jackpot"! Certainly the Conservatives are put in an embarrassing position in that they are relying upon the unelected senate which they despise to try and defeat the bill! Of course the Liberals could care less if the loss of revenues puts the Conservatives in a deficit position. There is probably a considerable constituency in favor of the bill and the Conservative government will not gain any votes even if somehow it manages to sabotage it.


Tories look for Senate allies to crush RESP bill
TheStar.com - Business - Tories look for Senate allies to crush RESP bill


JACQUES BOISSINOT/THE CANADIAN PRESS FILE PHOTO
Dan McTeague, the Liberal MP for Pickering-Scarborough East, meets with reporters in Toronto on Sept. 2, 2005. March 08, 2008
Bruce campion-smith
Ottawa bureau chief

OTTAWA–Federal Conservatives opposed to a new tax break for education savings are finding themselves in an awkward situation – blocking a tax cut and relying on the Senate, which they have said should be abolished, to help them stop it.

Conservatives are trying to muster Senate opposition to a Liberal private member's bill, quietly passed on Wednesday night, that would allow parents to contribute up to $5,000 a year to a registered education savings plan for each child and deduct that amount from their income taxes.

Dan McTeague, the Liberal MP for Pickering-Scarborough East who sponsored the bill, said the program would be similar to registered retirement savings plans and help encourage parents to save more for their children's education.

McTeague said yesterday he was willing to compromise on the limit that can be deducted, although he said he was prepared to fight for the bill in the Senate.

The Tories are balking at the price tag, warning the proposal would mean up to $900 million in lost revenues for the federal government.

The proposal would cost the provinces another $450 million in lost revenue, the Tories say.

Conservative MP Ted Menzies, the parliamentary secretary to the minister of finance, accused McTeague of "underhandedly" introducing a measure that would cost the federal coffers – already emptied by a string of Tory tax cuts – almost $1 billion.

"I would argue it's abuse of his privilege by adding that kind of cost onto ... the government through a private member's bill," Menzies told reporters yesterday.

"My plan right now is to talk to the Senators and, there's some reasonable-minded Senators that will look at this and say this is not good use of taxpayers' dollars," said Menzies. But that strategy is raising eyebrows on Parliament Hill, since it was the Tories who slammed Liberal Senators for their delay in considering crime legislation earlier this year. At the time, Tory House Leader Peter Van Loan criticized the "Liberal Senate delay-and-obstruction grinding machine."

Last fall, Prime Minister Stephen Harper, an advocate of Senate reform, said there's "no role in a modern 21st-century democracy for an unelected legislature." But Menzies had chanced his stance yesterday.

"I've always found a use for the Senate. There's some good people there. It's a house of sober second thought," he said.

But the Conservatives, who have painted themselves as tax cutters, could pay a political price for blocking a bill bound to be popular with parents who are already saving for their kids' education and are keen to get a tax break, warned Garth Turner, the Liberal MP for Halton.

"I think this has the potential of being extremely popular. The reaction I've had so far is people are delighted," Turner said.

He said the RESP tax deductions would benefit families more than the Tory savings plan, introduced in the Feb. 26 budget, that would allow anyone 18 or older to save up to $5,000 a year without paying taxes on the earnings or investment income generated.

"This actually allows families to get a net benefit back instantly from when they contribute," Turner said of the RESP proposal.

Under current rules, RESP contributions grow tax-free, but are not tax-deductible. Investment earnings are taxed in the hands of the student on withdrawal.

With files from The Canadian Press