Face of Nation : 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 taxable 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 at a campaign stop in Surrey, B.C. “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.
Based on Canada Revenue Agency data from 2017, about 34 per cent of country’s 27.8 million taxpayers have taxable earnings over $47,630 and thus will be able to claim the maximum benefit of this cut.
The other 66 per cent of all tax filers have lower taxable earnings and will see proportionally less of a benefit from the cut. 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. The costly cut is similar to a major tax change made by the former Conservative government.
Under Stephen Harper, the government cut the Goods and Sales Tax (GST) to six per cent in 2006 and then again to five per cent in 2008. According to PBO calculations, the cut cost the federal treasury about $14 billion a year in lost revenue. Despite the price of his proposed tax cut, Scheer said he is still committed to balancing the federal budget in a “responsible” timeframe.
“We’re going to get back to balanced budgets while we find ways to lower taxes and put money back in the pockets of Canadians,” he said, while adding a Conservative party would not cut social transfers to the provinces for programs like health care and education. 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.
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.
