Scheer said his government will cut the tax rate on the lowest federal income bracket — which applies to annual income up to $47,630 — from 15 per cent to 13.75 per cent over four years, one of a series of cuts he promised Sunday in an appeal to voters’ wallets.
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“It means every Canadian taxpayer will see their income tax go down, and those in the lowest tax bracket will see the biggest proportional benefit of all,” he said.
The “universal tax cut” will translate to over $440 savings in a year for an individual earner and about $850 for a two-income family with average salaries. It will be phased in over four years, starting with a reduction to 14.5 per cent in 2021, 14 per cent by 2022 and 13.75 by 2023.
“I wish I could say life has gotten easier for Canada’s middle class but it has not,” said Scheer. “People are working harder than ever, but many are barely getting by or even falling further behind. They’re definitely not getting ahead.”
“I believe what is best now for the Canadian economy is to take what we’ve got and then try to improve upon it,” he said. “We will do everything we can to improve upon what he has left us with without reopening the entire deal, because I will acknowledge that that would create a tremendous amount of uncertainty for our economy.”
Conservative leader Andrew Scheer on the federal election campaign trail with home owners Reed and Gretchen in White Rock, BC., September 15, 2019. NICK PROCAYLO / PNG
If elected, the Tory leader promised to eliminate GST and HST from home heating and energy costs, make maternity benefits tax-free, and cancel the federal carbon tax, which has taken affect in Saskatchewan, Ontario, Manitoba and New Brunswick. The tax does not apply in British Columbia and other provinces that already have similar carbon pollution taxes.
Scheer also criticized Liberal Leader Justin Trudeau for cutting tax credits the former Conservative government introduced to offset the costs of putting children in sports or arts classes, buying textbooks and using transit passes.
The Liberals eliminated those credits when they created the Canada Child Benefit in the 2016 budget, which rolled together a litany of previous benefits to help families with the costs of raising their children, and increased the total payout most people receive. Scheer has said he intends to keep that benefit in place as well. He also said he will restore the transit tax credit, a 15 per cent credit on eligible transit passes.
The Parliamentary Budget Officer pegged the cost of the universal tax cut at $6 billion a year once fully implemented.
Scheer said he remains “absolutely committed” to balancing the federal budget over five years, while increasing funding for health care and education by at least three per cent a year.
Its important to remember that massive deficits threaten those social programs, said Scheer.
Trudeau ran in 2015 on a promise to run budget deficits to invest in Canadians’ needs but to get back to balance by 2019. However, the most recent budget projected the 2019-20 year will have a $19.8-billion deficit.
The fact the Scheer chose Surrey as his first campaign stop in B.C. doesn’t come as a surprise, said Hamish Telford, a political-science professor at the University of the Fraser Valley.
“He’s obviously going to ridings first where he hopes he can flip them,” he said. “This is an area where the Conservatives have had success in the past, and that’s the kind of place they have to win back if they hope to win government.”
The Liberals wrestled Fleetwood-Port Kells from Conservative incumbent Nina Grewal, won the newly-created riding of Cloverdale-Langley City, and turned two other NDP ridings red.
Dianne Watts, the only Conservative candidate elected in Surrey, stepped down in 2017 to run for the leadership of the B.C. Liberals. Gordie Hogg then won South Surrey-White Rock for the Liberals in a byelection.
Telford said the Conservatives certainly have their pick of ridings to target, given a handful of ridings, particularly north of the Fraser River, which traditionally swung Conservatives got caught up in the Liberal tide in 2015.
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He also noted that Trudeau is doing the opposite, going into NDP ridings hoping to flip them Liberal. Trudeau launched his campaign last week at the Italian Cultural Centre in Vancouver-Kingsway, a riding held by incumbent NDP MP Don Davies.
Scheer was also expected to make campaign stops in Comox and Parksville on Vancouver Island to target NDP-held ridings.
Conservative Leader Andrew Scheer unveiled a new tax cut plan Sunday that he says will save taxpayers hundreds of dollars a year, a key plank of the Tory platform to make life more affordable.
Scheer said, if elected, a Conservative government would cut the tax rate on taxable income under $47,630 to 13.75 per cent from 15 per cent.
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.
"We're going to deliver a tax cut targeted specifically at taxpayers in the lowest-income tax bracket. This means that every Canadian will see their income taxes go down and those in the lowest tax bracket see the biggest benefit of all," Scheer said at a campaign stop in Surrey, B.C.
"This means more money to pay the bills, to save up for your kids' education or maybe even finally afford a family vacation," he said.
The party said the tax cut will be phased in over the course of a four-year mandate starting with a reduction to 14.5 per cent on Jan. 1, 2021, then to 14 per cent by Jan. 1, 2022 and then to 13.75 per cent on Jan. 1, 2023.
Based on Canada Revenue Agency data from 2017, about 34 per cent of country's 27.8 million taxpayers have taxable earnings over $47,630 and thus will be able to claim the maximum benefit of this cut.
The other 66 per cent of all tax filers have lower taxable earnings and will see proportionally less of a benefit from the cut.
The Parliamentary Budget Officer (PBO), the agency of Parliament that provides independent, non-partisan financial analysis, said the Conservative promise will cost the federal treasury about $14.075 billion in lost revenue between 2020-21 and 2023-24.
Under Stephen Harper, the government cut the Goods and Sales Tax (GST) to six per cent in 2006 and then again to five per cent in 2008. According to PBO calculations, the cut cost the federal treasury about $14 billion a year in lost revenue.
Despite the price of his proposed tax cut, Scheer said he is still committed to balancing the federal budget in a "responsible" timeframe.
"We're going to get back to balanced budgets while we find ways to lower taxes and put money back in the pockets of Canadians," he said, while adding a Conservative party would not cut social transfers to the provinces for programs like health care and education.
While initially promising an accelerated schedule of getting back to fiscal balance in two years, Scheer has since said he will balance the books within five years.
The tax cut announced Sunday is not unlike the Liberal government's "middle class tax cut," which was implemented after the last federal election.
However, that cut targeted the middle-income bracket — which applies on taxable income between $47,630 and $95,259. The Liberals reduced the rate of that bracket to 20.5 per cent from 22 per cent.
The Canadian Taxpayers Federation, an advocacy group that lobbies for lower taxes and smaller government, praised the Conservative plan Sunday, saying it will deliver "broad-based tax relief."
"Affordability is a key issue in this election campaign and leaving billions in the pockets of Canadian taxpayers is a great policy," said Aaron Wudrick, the federal director of the federation. "This income tax cut is exactly what taxpayers need: it would save Canadian families about $850 a year."
The Conservatives have already recalculated their previously announced tax credit proposals — for public transit and maternity and parental leave benefits — to account for the lower overall tax rate that would be in place as a result of this income tax cut.
Scheer did not say how it would affect other federal non-refundable tax credits — such as those for volunteer firefighters, search and rescue volunteers, home buyers, people with adoption expenses and for interest on student loans, among other eligible categories — which are all currently based on the lowest tax bracket of 15 per cent.
On the affordability theme, Scheer and the Conservatives recently unveiled a campaign ad featuring the party's election slogan: "It's time for you to get ahead."
The Conservatives are expected to unveil a series of campaign commitments in the same vein as this tax cut. Already, they have promised a non-refundable tax credit on maternity and parental leave Employment Insurance (EI) benefits. They've also vowed to remove the federal GST from sales of home heating fuels.
Scheer has also promised to reinstate the federal tax credit for transit passes, which, according to party estimates, would save a family of four transit users in the Greater Toronto Area nearly $1,000 a year.
Like his provincial conservative counterparts, Scheer has railed against the federal Liberal government's carbon tax and he has vowed to scrap it if elected. The Liberals maintain the initiative will lower greenhouse gas emissions and will be rebated to most families at tax time.
Canada's tax system is a progressive one with graduated brackets, meaning rates vary according to the amount of income you earn — and you pay different rates on different portions of your income.
John Paul (J.P.) Tasker is a reporter in the CBC's Parliamentary bureau in Ottawa. He can be reached at [email protected]
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