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CP Analysis: Arts credit off-key for most families

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Date: Monday Sep. 29, 2008 8:35 AM ET

OTTAWA — The Harper government sang Monday of a new tax credit for arts education, but analysts say the impact of their promise is off-key.

A promised $500 tax credit on arts activity fees for children under 16 will likely translate into a maximum $75 for families, experts said.

"When we talk about credits and the actual impact of a credits in the tax system, we're not talking about you're actually going to get $500 in your pocket," said Cleo Hamel, a senior tax analyst with H&R Block.

"Because it's a credit, it's only going to be a percentage that they make available to you based on a maximum $500 to start with and it's usually based on the lowest tax rate."

With the lowest tax rate set at 15 per cent, what looks like a $500 bouquet wilts into a $75 arrangement.

That cash comes off of the tax bill people owe the government.

"If you're in a refund position already, you could get a higher refund," said Bruce Ball, a tax partner with BDO Dunwoody, LLP.

"You'll get a higher refund because this would reduce your taxes even further."

At Kelowna Music School, artistic director Lorna Paterson applauded the idea, even if the dollar value doesn't amount to much.

At her school, a session's worth of music classes for five-year-olds costs $165, and she says they are already handing out bursaries to help families get their kids involved.

"The arts in Canada are under-funded," she said. "The options for parents who want their children to be enrolled in various music educational classes, they are limited in the same way that parents who want their kids in sports are limited, because there's a fee involved," she said.

"I don't see why the sports would be more important to many families in Canada than the arts."

Paterson was referring to the child fitness tax credit the Harper government rolled out in 2007, which allows families to claim a maximum $500 credit for enrolling their kids in recognized sports activities.

On Monday, Harper promised to make both the arts credit and fitness credit refundable for low-income families.

That means they could get the cash back, as if they pay no taxes a tax credit is meaningless.

"It's a nice gesture, and yes it's there and it's great that we're going to be promoting the arts, however how many people can actually take advantage of it, is really going to be the challenge," said Hamel.

"They talk about making this available for low-income families or moderate income families low income families in most cases don't even have the money to put their kids in programs like this."

The credit is worth estimated $150 million a year.

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