AYLMER, QUE. — A Liberal government would increase child benefits for middle- and low-income families, cut middle-class income taxes, and make wealthier Canadians pay more under its “fairness” plan, Justin Trudeau announced Monday.
The Liberal leader said his $3-billion tax cut plan would be progressive — unlike the Conservatives’ plan, which he said gives money to people who need it the least.
“We have a plan for fairness. A Liberal government will give a tax cut to the middle class and provide middle-class families with more money to raise their kids,” he said.
The announcement unveiled two major planks of the Grits’ election platform. First, the Liberals would scrap the Conservatives’ income splitting plan and replace it with a cut to the middle-class tax rate, to 20.5 per cent from 22 per cent. Every Canadian with taxable income above $44,701 would get a tax break worth up to $670 per year, they said.
Second, the Liberals would cancel the Tories’ recently announced boosts to the taxable Universal Child Care Benefit (UCCB) and replace it with a “Canada Child Benefit” that would provide larger, tax-free, cheques to middle and low-income families, worth up to $533 a month.
Under his plan, Trudeau said, a family of four earning $90,000 would get a tax-free payment of $490 a month. Under Prime Minister Stephen Harper’s plan, the Liberal leader said, that family would receive about $275 dollars a month.
“We're giving $2,500 more every year tax free to that family. Mr. Harper can’t afford to do this, but we can,” he said. “We can do more for the people who need it by doing less for the people who don’t.”
The Liberals would fund their plan by imposing a new tax bracket of 33 per cent — up from 29 per cent — on individuals earning more than $200,000, the so-called one per cent.
Their plan would still require an additional $2 billion, which hasn’t been clearly accounted for. Trudeau said the money would come from making different choices. The Liberals would not double the Tax Free Savings Account (TFSA), would use the $1.7 billion surplus projected for 2016-2017 and would also “make sure that we are not wasting as much money on advertising and outside consultants.”
In the House of Commons on Monday, Employment and Social Development Minister Pierre Poilievre said the Liberals were still raising taxes on Canadians by cancelling the TFSA increase and UCCB, “which the Liberals have long said were wasted on beer and popcorn.”
“He is going to replace our family tax cut with his family tax hike, including on low and middle income families,” Poilievre said. “We will not let them do that.”
During the 2005 election campaign, Scott Reid, Liberal prime minister Paul Martin’s top aide at the time, suggested on television that Canadians could not be trusted with direct monthly payments and that the money would be better spent on daycare spaces. Martin later apologized for Reid’s comments.
Monday, Trudeau promised future announcements regarding early childhood education and further help for those earning less than $44,000 a year.
He said the Liberals would not take the Universal Child Care Benefit away from middle-class Canadians but would upgrade it. “People will continue to get the cheques that Mr. Harper has promised until such a time as we bring forward a budget and implement an increase,” he said.
Outside the House, Poilievre and NDP finance critic Nathan Cullen would not tell reporters whether they think taxing Canadians who make more is a good idea.
Cullen, whose leader, Thomas Mulcair, had previously ruled out higher taxes on individuals, would not repeat that commitment Monday.
The NDP finance critic said he was concerned that the Liberals’ plan wasn’t fully accounted for and that $2 billion was missing. Cullen said he also found it “a bit strange that two thirds of Canadians won’t see a benefit from the tax cut proposals that were put forward.”
Statistics Canada confirmed that the survey on labour and income dynamics for 2011 shows 60 per cent of Canadians make $37,100 or less a year, but senior research analyst Xuelin Zhang said that number includes children. According the Canada Revenue Agency, approximately one third of Canadians pay no tax at all.
On Monday, Trudeau said nine out of 10 families — every family with kids and income less than $150,000 — would receive more in monthly child benefit payments under his plan than under Harper’s.
“We think a plan that gives families like mine or Mr. Harper’s $2,000 a year isn’t a responsible plan for fairness or for growth for our economy,” he said.
The Canada Child Benefit would start at $6,400 a year, tax-free, per child under the age of six, and $5,400 a year, tax-free, per child six to 17 years of age for families with the lowest income, declining in increments for families making more. It phases out completely for families earning more than $190,000 a year.
In contrast, the Conservatives’ enhanced UCCB is a taxable $1,920 annual benefit for children under six and a taxable $720 annual benefit for children six to 17. It goes to every family no matter how much they make.
But the Liberals’ proposed Canada Child Benefit also replaces two other benefit programs currently directed at low-income Canadians. The Canada Child Tax Benefit (CCTB) and National Child Benefit Supplement (NCBS) are worth about $3,750 annually to families. The Liberals say their $4-billion plan would provide more assistance and make the system less complicated.
In a speech at a family restaurant in Aylmer, Que., Trudeau said he has spent the past two years meeting Canadian families and hearing about their concerns.
People are worried about saving for their kids’ education or their own retirement, and that’s not right, he said.
“Everywhere I go, people tell me they don’t feel like there is anyone on their side,” Trudeau said. “No wonder. Stephen Harper and his government isn’t on your side. He just gave a $2-billion tax break that favours the wealthy.”
The main planks of the Conservatives’ re-election platform include a boost of $60 a month to families with kids under 18 and a $2.2 billion family tax cut, also known as income splitting. The Tory plan allows families with children under 18 to transfer $50,000 of one partner's income to the other in order to save a maximum of $2,000 a year in taxes.
The Liberals, the NDP and several think tanks — including the conservative-leaning C.D. Howe Institute — have criticized the plan for benefiting only 15 per cent of Canadian households. Other research, however, including a report from the Parliamentary Budget Officer, notes that the middle class will also benefit from the Tories’ plan, though lower income families would be disadvantaged.
The NDP’s plan calls for $15 federal minimum wage, a tax cut to small businesses and a national $15-a-day daycare plan. The NDP has previously said it would pay for this by raising corporate taxes, scraping income splitting and the TFSA increase. But Mulcair has said he would keep the enhanced the Universal Child Care Benefit.
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