OTTAWA -- Finance Minister Bill Morneau has tabled to move on the Liberal鈥檚 promised tax cut for the middle class.
The Liberals had pledged on the campaign trail, and restated in the speech from the throne last week, that the first item of business they'd advance would be a middle class tax cut, as they did in 2015. While it was thought they鈥檇 table a bill to implement this, the government has instead introduced a ways and means motion seeking the House's approval to increase the basic personal income tax exemption by $2,000, to $15,000.
Morneau and his associate and Minister for Middle Class Prosperity Mona Fortier made the announcement in the foyer on Monday morning.
鈥淲e know the very first thing we want to move forward鈥� is a reduction in taxes for middle-class Canadians. It鈥檚 why today we are moving forward on that as the first order of business,鈥� Morneau said. 鈥淲e know that it will have an important impact.鈥�
The motion proposes to amend the Income Tax Act, to make it so that by 2023 Canadians will pay no federal taxes on the first $15,000 they earn. The change is being implemented gradually over the next four years, meaning that in 2020 the proposed adjustment amounts to a just-under-$1,000 increase to the basic personal income amount, up to $13,229 from the current $12,298.
The government projects that 20 million Canadians鈥� taxes will be cut as a result, once it is fully phased in, saving single Canadians $300 in tax a year, and saving families an estimated $600.
The top one per cent of Canadians will not benefit from this increase and the increase in the basic personal income amount is being gradually reduced for people who make more than $150,473.
The tax change would also result in nearly 1.1 million more Canadians no longer paying any federal income tax, by 2023. Based on the government鈥檚 gender-based analysis, almost 60 per cent of those individuals are women.
Based on the government鈥檚 estimates, the cost of implementing this tax change is expected to reach $3 billion in 2020-21, rising to $6 billion by $2023-24.
鈥淎s we think about measures that are going to have the biggest impact, putting more money into peoples鈥� hands as they deal with affordability challenges, that鈥檚 what is going to have a big impact,鈥� Morneau said in an interview on CTV鈥檚 Power Play.
Morneau said earlier in the day that he is confident the Liberal minority will be able to find the support needed to see this motion pass in time to be implemented by 2020. That means it鈥檒l have to come up for a vote at some point this week, as MPs are scheduled to rise for a weeks-long winter break as of Friday.
鈥淲e look forward to working with the other parties,鈥� Morneau said.
Conservative finance critic Pierre Poilievre said that the tax cut is 鈥渢oo little and too late,鈥� in an emailed statement.
鈥淭oo late because taxpayers will need to wait four years to see the full benefit; too little because most of the increase will be gobbled up by inflation in that time,鈥� he said, adding that the Conservatives would 鈥渞ead their latest proposal to ensure their deeds match their words,鈥� but didn鈥檛 clarify whether or not that means their support will be there to help pass this policy.
The NDP though, suggests the government should considerably pare down this proposal and use the savings to pay for a dental care plan for Canadians which they campaigned on. Asked whether their support for this plan is contingent on changes that reflect their suggestion, NDP House Leader Peter Julian said 鈥渨e鈥檒l see.鈥�
The finance minister also stated that the government will be providing a fiscal update on the status of federal finances before Christmas, after the Conservatives called on him to provide the first post-election economic update, as soon as possible.
