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Canada to cap child care costs at $10 a day while U.S. let child tax credit expire

Canadian Prime Minister Justin Trudeau’s government has reached agreements with most provinces and territories to cap child care costs at $10 per day. (Adam Scotti/PMO)

(CN) — Canada and the province of Ontario have cemented an agreement where Ontario will receive $10.2 billion in federal funding to cut child care costs to $10 a day by 2026.

Prime Minister Justin Trudeau and Ontario’s premier Doug Ford collaborated on the Canada-Ontario early learning and child care agreement. Set to begin on April 1, 2022, Trudeau and Ford say the five-year agreement will reduce licensed child care fees for children under the age of six and create 86,000 new licensed early learning and child care spaces in the province.

Under the deal, Ontario will receive the funding through 2025-26 and an additional $2.9 billion in 2026-27. The funding comes on top of the annual and ongoing $9.2 billion the province received in the 2021 budget.

Trudeau’s government says the goal is to increase affordability of child care, get parents back into the workforce, and give families of children with special needs better access to child care. There is an ongoing collaborative effort to discuss a plan on how to support Indigenous children’s access to affordable and culturally appropriate care.

“With the signing of today’s agreement, we’re making $10-a-day child care a reality for families across country. Today’s announcement will save Ontario families thousands of dollars each year — with fee reductions starting as of Friday this week – while creating jobs, growing the middle class, and giving our kids the best start in life,” Trudeau said in a statement.

The Canadian government has already reached similar agreements with its other provinces and territories and an “asymmetric agreement” to improve early learning and child care with the government of Quebec.

In contrast, the U.S. Congress let the expanded child tax credit expire this past December.

As part of President Joe Biden’s Build Back Better Plan, the expanded program sent working families monthly checks that ranged from $250 to $300. Under Internal Revenue Service rules, eligible families included married parents filing joint returns, as well as widows or widowers making under $150,000.

Studies conducted by the Center on Budget and Policy Priorities and the U.S. Census Bureau proved the monthly payments helped reduce child poverty and child hunger, especially after the Covid-19 pandemic upended the workforce and hampered access to affordable child care. The center found the expanded program boosted 17 million working adults’ incomes, where previously 5.8 million working adults were “taxed into, or deeper into, poverty”. And the Census Bureau said 21 million people in the U.S. didn’t have enough to eat in this past December, the same month Congress let the program expire.

Because of Democratic Senator Joe Manchin of West Virginia’s opposition, the bill did not come up for a vote in the Senate. He expressed concerns related to the $1.75 trillion cost of the bill and that it could affect inflation.

“I will not support a bill that is this consequential without thoroughly understanding the impact that it will have on our national debt, our economy and, most importantly, all of our American people,” Manchin said in November.

Additionally, two sources revealed Manchin claimed that some parents would use the money from the program on drugs instead of their children, the Huffington Post reported.