Federal government’s family tax cuts won’t be cheap, say experts

WATCH ABOVE: Income-splitting debate continues in House of Commons

OTTAWA – Experts say the federal government’s cupboard might be bare because of Prime Minister Harper’s sweeping new package of family tax cuts.

The package announced Thursday includes an income-splitting measure to eligible families with kids under 18.

READ MORE: Harper unveils controversial tax relief for Canadian families

It will allow an eligible taxpayer to transfer up to $50,000 of income to his or her spouse for tax purposes in order to collect a non-refundable tax credit of up to $2,000.

There is also a beefed up universal child care benefit and higher limits on the existing child care expense deduction.

WATCH: Harper unveils income splitting, expands child care benefit

It won’t be cheap — the measure are expected to cost more than $7.5 billion over the next two budget years.

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But Harper repeated yesterday that the government would run a small deficit this year and a small surplus next year.

TD economist Randall Bartlett predicts there will be enough surplus room in the federal piggy bank to finance the cuts.

But he cautions it will be tight — at least for this year.

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