The level of personal and corporate taxation ranks high amongst voter’s priorities election after election in Canada. With the introduction of the price on pollution (which some refer to as the carbon tax), federal taxes will once again be a major election item in the Fall 2019. Personal income taxes are a core household expense and therefore framed politically as a core component of affordability.
Under the Liberal Government, multiple tax measures were introduced to address affordability, including the repackaging and introduction of the Canada Child Benefit, the repackaging of the Canada Workers Benefit, the Canada Housing Benefit, as well as reducing the second-lowest personal income tax rate to 20.5 from 22 per cent. At the same time, the Trudeau Government eliminated several tax credits including the children’s tax credit, public transit tax credits and the income-splitting tax credit for couples with young children.
Personal income tax revenues—the largest component of government budgetary revenues—are projected to increase by $9.2 billion, or 6.0 per cent, to $162.8 billion in 2018–19.
After significant tax changes made over the past three years, Budget 2019 was light on tax changes. Budget 2019 did not propose any personal or corporate income tax rate changes.
The Liberal Party will run in 2019 on their record, such as the introduction of a carbon tax, accompanied by a rebate to households. As well as a number of measures introduced throughout their mandate, such as the Canada Child Benefit, under the mantra that nine out of ten families have more money today than in 2015, and the lowering of personal taxes to 20.5 from 22% for the second lowest income bracket.
The Conservative narrative has focused on a promise of lowering the cost of living and making life more affordable, pointing at the Liberal Government for increasing taxes and removing tax credits.
In addition to canceling the federal carbon pricing system, Opposition Leader Andrew Scheer announced that a Conservative government would remove GST from home heating and energy bills.
A New Democrat government will also boost the top marginal tax rate and ask the very richest multi-millionaires to pay a bit more towards shared services with a new one percent wealth tax on wealth over $20 million.
- Doubling the Home Buyer’s Tax Credit to $1500
- Wave federal tax sale for Zero Electric Vehicles
No specific proposals yet.
No specific proposals yet.
No specific proposals yet.
On Tuesday, Andrew Scheer pledged to repeal tax changes for small business investments brought forward by Finance Minister Bill Morneau in 2018. It includes a pledge to restore access to the small business tax rate for businesses with a passive annual income of more than $50,000, as well as allow such firms access to refundable taxes for corporations on the distribution of eligible dividends.
As well, Scheer wants to exempt spouses or common law partners of small business owners from Liberal changes restricting the savings from income sprinkling, a strategy used by wealthy owners of private corporations to divert their income to family members with lower personal tax rates. Small business tax changes were first proposed by Morneau in the summer of 2017 and then tweaked in 2018 following a strong outcry from certain business owners, including family doctors operating their own practice.
The Tory leader is also pledging to reduce federal regulations by 25 per cent. While Scheer did not offer specific examples as to what red tape can be cut, he committed to eliminate outdated regulations he described on Tuesday as “low-hanging fruit.”
The Montreal Economic Institute, a think tank promoting liberal economics, estimated last year that there were 136,121 federal regulations, meaning a Scheer government would have to cut more than 34,000 measures.
Scheer is also vowing to appointing a minister to lead red tape-cutting efforts, as well as removing two regulations for every one adopted — echoing a commitment in Ontario by Premier Doug Ford.
Kevin Milligan, an economist at the University of British Columbia, said rolling back the Liberal government’s changes would benefit some of Canada’s wealthiest. In a Twitter thread, he said the passive investment proposal would affect the top 2.9 per cent of private companies, but would receive 88 per cent of such income.
“These proposals clearly benefit the highest earners who have private corporations,” Milligan said. Canada’s independent budget officer estimated repealing Liberal measures on passive income would cost more than $500 million annually, totalling $5.4 billion between 2020-21 and 2028-29.
Exempting spouses from taxes on income sprinkling would cost $334 million over nine years starting in 2020. A commission tapped to review tax competitiveness would cost $20 million.
Such efforts would ultimately widen the hole in federal revenues, although Scheer said Tuesday a fully costed platform will be released soon that shows a path towards balanced budgets in five years.
Liberal Leader Justin Trudeau announced that if re-elected, his government would cut corporate taxes by 50% for clean technology companies that fosters the “zero emissions economy”, including companies developing zero emissions vehicles.
Trudeau announced he would make the first $15,000 of income tax-free for most Canadians if given a new mandate.
The Liberals would raise the basic personal amount by almost $2,000 over four years for people earning under $147,000 a year. It would save the average family $585 a year, Trudeau said.
The announcement follows a pledge from Conservative Leader Andrew Scheer to cut the tax rate on the lowest federal income bracket (up to $47,630) to 13.75 per cent from 15 per cent over four years, which the party says would save a two-income couple earning average salaries about $850 a year.
On September 16, Andrew Scheer said he will re-introduce the children’s fitness tax credit. This tax credit would go toward extracurricular activities, from sports to music lessons to tutoring, for children under the age of 16. Parents of children with disabilities would receive more from the promised credits. For every child with a disability, the sports credit would be worth $500 more a year, while the arts credit would double to $1,000.
On September 15, Conservative Leader Andrew Scheer promised he will cut the tax rate on the lowest federal income bracket the one charged on income up to $47,630 from 15 per cent to 13.75 per cent over the next four years. 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. Scheer also wanted to revive the transit tax credit, worth 15 per cent of the cost of monthly or annual transit passes.
If elected, the Liberals will reduce the cost of federal incorporation, remove all fees for business advisory services from agencies like the Business Development Bank of Canada, and create a voluntary payroll system to automate records for small businesses.
A Liberal government would also launch a pilot project that would provide as much as $50,000 for up to 2,000 entrepreneurs to help them start a business.
Trudeau says a Liberal government would give $250 to every new business to help them develop a website or e-commerce platform.
The Liberals estimate the measures would cost the federal treasury $129 million next year, a number that would rise to $163 million in 2023-24.
Liberal Leader Justin Trudeau says a Liberal government would eliminate the so-called "swipe fee" on sales taxes that merchants must pay to credit-card companies on every transaction.
Scheer promises public transit tax credit as part of climate change plan. The Liberal government cut the tax credit in the 2017 budget, saying it was ineffective and they would rather spend the money on building transit. The Conservatives say their measure, which they are calling the Green Public Transit Tax Credit, would give people a 15-per-cent credit at tax time. Costing would be an estimated $229 million a year.
Today, CPC Leader Andrew Scheer announced that a Conservative Government would make maternity benefits tax free. Mr. Scheer would remove federal income tax from Employment Insurance (EI) maternity and EI paternal benefits by providing a non-refundable tax credit of 15 percent for any income earned under these two programs. According to CPC figures, the benefit to a Canadian whose salary is $50,000 would be about $4,000. According to the announcement, all Canadian families would be eligible for the new benefit.
A new Conservative government will provide a tax credit of an equivalent amount for residents of Quebec who receive benefits under the Quebec Parental Insurance Plan (QPIP).
The union representing Canada Revenue Agency employees is publicly campaigning against Conservative Leader Andrew Scheer’s plan to implement a single tax return for Quebec that would be administered by the province’s revenue agency.
The Union of Taxation Employees (UTE), which is part of the Public Service Alliance of Canada, announced Monday that it had launched a campaign against Scheer’s proposal that includes a French-language radio advertisement for the wider Shawinigan region, which is home to the CRA’s National Verification and Collections Centre. There are over 1,300 CRA employees in Shawinigan alone.
UTE national president Marc Brière called Scheer’s suggestion that the 4,000 union members working for the CRA in Quebec who would lose their current jobs could simply be reassigned to audit functions to fight tax evasion as nonsensical and “completely ridiculous.”
“We wish to vehemently denounce this highly dubious proposal from the Conservatives. To tell Quebecers that they will be treated the same as other Canadian citizens is simply not true since in the rest of the country, it’s the Canada Revenue Agency (CRA) that administers taxes for the federal government and for the province and not the other way around,” he said in a statement.
Quebec is the only province that independently collects its own taxes, with all others delegating that responsibility to the Canada Revenue Agency. As a result, Quebecers must file separate returns to the federal and provincial governments.
The federal Conservatives announced in early February that if they form government after this fall’s election, they would immediately start negotiations with Quebec on moving toward a single tax return for the province, and Scheer said he would allow Quebec’s revenue agency to collect federal taxes for the province.
Collectively, the CRA employs over 5,500 people across 14 regional offices in Quebec. Brière said the UTE is “not opposed” to having a single tax return but if the Conservatives really want to save taxpayers money, the “single tax return should be administered by the federal government, not by Quebec.”