Conservative Leader Andrew Scheer unveiled a new tax cut plan Sunday that he says will save taxpayers hundreds of dollars a year, a key plank of the Tory platform to make life more affordable.
Scheer said, if elected, a Conservative government would cut the tax rate on income under $47,630 to 13.75 per cent from 15 per cent.
Based on the party’s calculations, the average single taxpayer would save about $444 a year. A two-income couple earning an average salary would save about $850 a year.
“We’re going to deliver a tax cut targeted specifically at taxpayers in the lowest-income tax bracket. This means that every Canadian will see their income taxes go down and those in the lowest tax bracket see the biggest benefit of all,” Scheer said.
“This means more money to pay the bills, to save up for your kids’ education or maybe even finally afford a family vacation,” he said.
The party said the tax cut will be phased in over the course of a four-year mandate starting with a reduction to 14.5 per cent on Jan. 1, 2021, then to 14 per cent by Jan. 1, 2022 and then to 13.75 per cent on Jan. 1, 2023.
Cut will cost billions
The Parliamentary Budget Officer (PBO), the agency of Parliament that provides independent, non-partisan financial analysis, said the Conservative promise will cost the federal treasury about $14.075 billion in lost revenue between 2020-21 and 2023-24.
In subsequent years, the tax cut will mean roughly $6 billion less a year in federal revenue.
Despite the price of such a cut, Scheer said he is still committed to balancing the federal budget in a “responsible” timeframe.
While initially promising an accelerated schedule of getting back to fiscal balance in two years, Scheer has since said he will balance the books within five years.
The tax cut announced Sunday is not unlike the Liberal government’s “middle class tax cut,” which was implemented after the last federal election.
However, that cut targeted the middle-income bracket — which applies on taxable income between $47,630 and $95,259. The Liberals reduced the rate of that bracket to 20.5 per cent from 22 per cent.
On the affordability theme, Scheer and the Conservatives recently unveiled a campaign ad featuring the party’s election slogan: “It’s time for you to get ahead.”
More tax promises coming
The Conservatives are expected to unveil a series of campaign commitments in the same vein as this tax cut. Already, they have promised a non-refundable tax credit on maternity and parental leave Employment Insurance (EI) benefits. They’ve also vowed to remove the federal GST from sales of home heating fuels.
Like his provincial conservative counterparts, Scheer has railed against the federal Liberal government’s carbon tax and he has vowed to scrap it if elected. The Liberals maintain the initiative will lower greenhouse gas emissions and will be rebated to most families at tax time.
Canada’s tax system is a progressive one with graduated brackets, meaning rates vary according to the amount of income you earn — and you pay different rates on different portions of your income.
In 2019, the income tax brackets are as follows:
- 15 per cent on the first $47,630 of taxable income, plus
- 20.5 per cent on the next $47,629 of taxable income (on the portion of taxable income over 47,630 up to $95,259), plus
- 26 per cent on the next $52,408 of taxable income (on the portion of taxable income over $95,259 up to $147,667), plus
- 29 per cent on the next $62,704 of taxable income (on the portion of taxable income over 147,667 up to $210,371), plus
- 33 per cent of taxable income over $210,371