On Friday, December 4th, the Liberals delivered the highly-anticipated throne speech to kick off the 42nd parliament. Governor General David Johnston read the throne speech, outlining the priorities for the new Liberal government. Election promises that affect the finances of Canadians, include less taxes for the middle class, reducing the age for Old Age Security, and a possible expansion of Canada Pension Plan (CPP).
Tax Cut for the Middle Class
A promised tax cut for the middle class was key in getting the Liberals elected. The Liberals said that this tax measure was an “immediate priority.”
“This is the fair thing to do, and the smart thing to do for Canada’s economy,” Johnston said during the speech.
If you’re part of the middle class and feeling squeezed by taxes, you’re not alone. The Liberals have promised to make taxes “more fair” for middle income earners. It’s the government’s hope that middle class Canadians will use the extra money to save and invest to grow our economy.
The Grits will reduce the middle income tax bracket to 20.5 percent from 22 percent. Canadians with taxable income from $44,700 to $89,401 will see their income tax rate fall. At the end of the day, you can expect to save a maximum of $670 per person annually or $1,340 in a two-income household.
To help balance the books, the Liberals are increasing the tax bracket for the highest earning Canadians. The Grits will introduce a new 33 percent tax bracket for those with taxable income above $200,000.
Other Tax Savings
Retirement was a big theme in the throne speech. The Liberals reaffirmed their commitment to look at expanding CPP. Although we’re a long way away from CPP expansion, if it goes through it will help ensure Canadians save enough for retirement. The government’s commitment to lowering the age for Old Age Security from 67 to 65 was also mentioned.
Families can also expect a tax break under a Liberal government. Johnston mentioned in the speech the new Canada child benefit the Grits are introducing. To pay for this tax break, the Liberals are getting rid of the Family Tax Cut (FTC) and the Universal Child Care Benefit (UCCB). The Liberals say nine out of 10 families can expect to receive more under their new tax break compared to the Conservatives. A typical family of four will have an extra $2,500 per year.
After inheriting a $2.3 billion deficit from the Tories, some are concerned the Liberals won’t be able keep all their promises. The Canadian Taxpayers Federation is worried the government will have to make a tough decision between raising taxes and reneging on election promises.
“They’ve made a lot of big promises and the government will be hard pressed to find a way to pay for them all,” said Canadian Taxpayers Federation director Aaron Wudrick.
If you’re wondering how you’ll benefit under a Liberal government, feel free to contact our office. We can sit down with you and let you know how the new tax measures will affect your family’s finances.