Andrew Scheer proposes tax-free maternity and parental benefits

Conservative leadership candidate Andrew Scheer says he wants to make maternity and parental leave less expensive for families by designating the benefits parents receive while on leave as tax-free.

A release from the Scheer campaign Tuesday framed the proposal as "giving more choice to parents of newborns."

The costs of caring for a new baby, it said, coupled with lost income when a parent stays home to be a caregiver, "can be overwhelming and a source of stress in what should be an incredibly happy time."

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Scheer is proposing the government not deductfederal income tax on the special benefits parents can draw on if they're eligible for maternity or parental leave under the employment insurance system.

Because provincial income tax is also deducted fromEI benefits, the federal government would need provinces to agree to forego this revenue in order for benefits to be entirely tax-free.

'Too restrictive' forworkduring leave

Scheer also proposes raisingthe limit on how much employment income a parent can earn each week while on leave.

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Currently, if a claimant works while receivingEI maternity benefits which are paid to abiological mother for15 weeks after giving birth the government deducts theentireamount of the income earned from eachweek's benefits.

Parental benefits which are available for up to 35 weeks for eitherparent, including an adoptive parent are clawed back if the claimant earns more than $50 of other income in a given week.

But under apilot project in place until 2018, those receivingparental benefits cankeep 50 cents of benefits for every dollar of other income earned, up to a limit of 90 per cent of the average weekly earnings used to calculate their benefit amount.

It's unclear whether the federal government will turn this pilot project into a permanent change down the road.

Scheer's campaign says hewants to go beyond what the federal government is currently looking at with itspilot project.

"I have heard countless stories of frustration from parents who feel the current limits are too restrictive," Scheer's release said. Raising the limit"just makes sense."

Estimated cost: More than $500M

Scheer's campaign estimates that making benefits tax-freewould cost the federal government at least$500-600 million annually, a calculation based takingthe number of EI maternity and parental leave claimants in 2014-15 and assuming an average annual income among them of about $50,000, triggering a 15 per cent federal taxation rate.

A more precisecost would vary each year based on how many parentsdrew benefits and how high their rates of taxation would otherwisebe.

If taking time off work to care for children became more popular as a result of this kind of change, the costtothe government would rise.

On the other hand, children in lower- and middle-income families could benefit from the boost to theirhousehold's budget.

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