Conservatives outline plan to kill Liberal RESP bill

The Conservative government will use the budget implementation bill to try to quash a Liberal attempt to sweeten the tax breaks for Registered Education Savings Plans, Finance Minister Jim Flaherty said Monday.

"We'll use the budget implementation legislation to negate the bill," Flaherty told CBC News. 

"We need to do that," he said. "My job is to make sure we have a sound fiscal plan and a sound budget process."

Last week, a private-members bill introduced by Liberal MP Dan McTeague found support from all three opposition parties on third reading and was passed.  

'I kind of like the idea of campaigning on this.' —Liberal MP Dan McTeague

The bill, which is now awaiting approval from the Liberal-dominated Senate, allows parents to deduct up to $5,000 in RESP contributions from their income — something that isn't allowed under current rules.

Flaherty said the "irresponsible" Liberal bill would cost the federal treasury "$1 billion or more." He dared the Liberals to vote against the budget implementation bill. As a confidence motion, a defeat of the bill would trigger an election.

"I kind of like the idea of campaigning on this," McTeague said, who described the response of Canadians to his bill as "overwhelming."

"I think if Mr. Flaherty wants a showdown, he's going to have to answer to his constituents — the middle class — why he turned his back on them and why he's provided a far inferior offer," McTeague said, referring to the Tax-Free Savings Account proposal in Flaherty's budget.

'Good idea:' Dion

Liberal leader Stéphane Dion on Monday called the RESP tax break "a good idea" and suggested that something like it has a future in Liberal party policy during the next election.

"Maybe not exactly as it is … but certainly savings are at a record low in Canada," he said. "Our citizens are in debt, so there is a social problem that is affecting our competitiveness in the world if we are not able to help more students to focus on their studies."

The budget bill itself has already passed the House of Commons, but the legislation that enables the budget measures has not.

It is to this legislation that the government would attach some provision that it says would nullify the Liberal RESP bill. The enabling legislation could be introduced as early as this week.