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The Harper government is warning that it's "highly unlikely" that the March 19 federal budget will be able to deliver income splitting for all Canadian couples because of other pressing fiscal obligations.
"To do income splitting would be about $5-billion and it doesn't appear we have the fiscal room to move on that in this particular budget," a senior government official told The Globe and Mail.
The official said both Prime Minister Stephen Harper and Finance Minister Jim Flaherty are of the same mind on the issue.
"The Prime Minister and the Finance Minister are both on the same page: They looked at the numbers and both came to the conclusion that income splitting is highly unlikely this year," the source said.
Income splitting for the purpose of tax filing -- also called joint filing -- would enable couples to average out their income and reduce the tax they pay.
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He said this doesn't mean the Tories are abandoning broader income splitting.
"Obviously the government supports the idea . . . so it's quite possible down the road." Income splitting is a tremendously appealing tax relief measure for many couples, especially among Conservative-leaning voters, and this message is an attempt to scale back expectations of how much Mr. Flaherty's second budget can achieve.
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- reprinted from the Globe and Mail