Justin Trudeau pledges tax hike on richest 1 per cent in Liberal economic proposal

The Harper economic plan targets breaks and family benefits to the rich, while “we’re reinvesting in the people who actually need it,” Trudeau told reporters in a policy announcement considered a key plank in the Liberals’ fall election platform.

Thestar.com
May 4, 2015
By Les Whittington

Liberal Leader Justin Trudeau is promising his party would raise taxes on the richest Canadians and reduce middle-class income taxes by up to $670 a year per individual taxpayer.

At the same time, the Liberals, if elected, would combine a handful of existing federal child support plans into a single program that Trudeau said will provide more money to middle-income and lower-income families than under Conservative programs.

“We can afford to do more for the people who need it by doing less for the people who don’t,” Trudeau said at a family restaurant in Gatineau, Que., as he delivered his first major pre-election pledge.

The money earmarked for Prime Minister Stephen Harper’s family allowance program, the Universal Child Care Benefit, would be channeled into Trudeau’s proposed overall plan, the Canada Child Benefit (CCB).

And to fund the CCB, which would cost Ottawa an extra $4 billion annually, the Liberals would also cancel the Conservatives’ increase in annual contribution limits for Tax-Free Savings Accounts. Trudeau says the increased TFSA limits help mainly well-off Canadians.

Also gone would be Harper’s Family Tax Cut. This measure, which allows families with minor children to split their income for tax purposes, costs $2 billion a year in foregone tax revenues and, according to the Liberals, disproportionately benefits the rich.

Asked if all that doesn’t add up to a $2 billion budget shortfall, Trudeau pointed out that the Conservatives have predicted a $1.7 billion surplus in 2016, which would make up most of the $2 billion budget hole. And a Liberal government would keep its costs down by reducing Ottawa’s spending on advertising and non-government consultants, Trudeau said. The Liberals have previously promised to balance the budget in 2016 if elected.

In the Liberals’ proposed “middle-class tax cut” - those earning between $44,701 and $89,401 - would see their income tax rate reduced to 20.5 per cent from 22 per cent. For a two-income household, this would mean an income-tax saving of $1,340 a year, the Liberals estimate.

Those making over $200,000 a year will be taxed at a new, higher rate of 33 per cent, the Liberals propose. This would apply to less than one per cent of the public, the party said.

“Canadians who have done well have always been willing to help out in meaningful ways,” Trudeau said, explaining the tax on the rich. He added it is unfair for well-off families such as his and Harper’s to be receiving thousands of dollars in family tax breaks and child benefits. “We’re reinvesting in the people who actually need it,” Trudeau told reporters.

Under the Liberal child support program, most families with children and incomes below $150,000 will receive more in monthly child benefits than under the Conservatives’ plan, Trudeau said.

With their plan, the Liberals say a two-parent family with two kids and earning $90,000 a year would receive $490 tax-free each month, or $5,875 a year. This is significantly more than under the Harper government’s plan, Trudeau said.

He said the revamped child support package would help level the playing field among Canadian families and provide more of a boost for economic growth.

“For 10 years, Harper has been ignoring the people who do most of the heavy lifting in our economy, who work longer and longer hours for an ever-shrinking piece of the pie and less and less financial security,” Trudeau told the packed restaurant.

“Well, that’s not fair. And not only is it unfair to you, but it’s not good for the economy,” he said. “We need middle-class Canadians to have money in their pockets to save, invest and grow the economy.”

The Conservatives called the Liberal proposal a tax grab because it would scrap the increased TFSA contribution limit, which is being raised to $10,000 a year from $5,500. Investment gains under a TFSA accumulate on a tax-free basis.

Employment Minister Pierre Poilievre said many middle-class Canadians use TFSAs as a valuable savings tool.

“The Liberals admit that they want to raise taxes on these people by scrapping the expanded tax-free savings accounts,” he said in the Commons.