Liberal tax cut gives poorest Canadians just $11 annually

Carney’s campaign promise to implement a tax cut to “deliver real change” will amount to working Canadians in the lowest tax bracket saving about $11 annually.

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Prime Minister Mark Carney’s campaign promise to implement a tax cut to “deliver real change” will amount to working Canadians in the lowest tax bracket saving about $11 annually, according to an economist with the Canadian Centre for Policy Alternatives.

CCPA senior economist David Macdonald told the Senate national finance committee that, despite the $5.8 billion cost of the tax cut, Canada’s poor will benefit the least from it of any tax bracket.

First covered by Blacklocks Reporter, MacDonald testified that Bill C-4, An Act Respecting Certain Affordability Measures, would not make for major savings as promised by the Carney government.

The tax cut reduces the rate on the first $57,375 of individuals’ taxable earnings from 15 to 14 per cent, which Carney claimed would “benefit a two-income family by up to $825” back in March.

However, Macdonald called the prime minister’s claim misleading.

“The $6 billion price tag for the bottom bracket change is what it would have cost to increase the Canada Disability Benefit to $7,000 a year and lift over 200,000 people with disabilities out of poverty,” Macdonald told the committee on Tuesday.

“The drop in the bottom bracket rate has been pitched as an affordability measure but provides effectively no benefit to those in poverty and little benefit to those in the middle class.”

The legislation passed Second Reading in the Commons by a unanimous 335-0 vote in June.

Finance Minister François-Philippe Champagne previously told MPs that Bill C-4 would “deliver real change” for Canadians by bringing down costs.

During the last general election, Champagne said that Canadians were in a “dire situation” and that they wanted the Liberals to “do bold things” to turn the country around “quickly.”

However, Macdonald noted that for those living in poverty, the lowest bracket shift only provides them with an average annual benefit of $11.

“The lowest income tax filers already have enough credits to reduce their taxable income to zero, so you can change the tax rate, but it won’t matter as they do not pay income taxes to begin with,” he said.

“On the other hand, the top third of filers will make an average $300 a year from this change and middle-income earners would see an average of $184 a year. Incredibly, of the almost $6 billion spent annually on this single measure, only three percent of it winds up with the bottom third of tax filers. This is not a measure that will have any tangible impact on affordability, particularly for those who need it most.”