The average Canadian family will save $280 on their taxes next year from the Liberal government’s planned income tax cut, the parliamentary budget officer said in an analysis released on Wednesday.
But some seniors and single Canadians are expected to save less, prompting criticism from Conservatives who argue the tax cut doesn’t go far enough.
The Liberal proposal would drop the tax rate to 14.5 per cent from 15 per cent on the first $57,375 of Canadians’ taxable income this year, and down to 14 per cent next year. The promise was a pillar of the Liberal campaign during the spring federal election.
At the time, Prime Minister Mark Carney’s plan pitched annual savings of up to $825 per dual-income family.
When the legislation was tabled through a ways and means motion late last month, Finance Canada projected maximum tax savings of $840 per couple.
Yves Giroux, the parliamentary budget officer, said Wednesday that the average family likely won’t get that much back.
On a per-person basis, the average tax filer is estimated to save $90 on their 2025 income taxes because the tax cut only takes effect on July 1. The PBO expects that average will rise to $190 in savings next year.
The PBO says a two-income couple in the second income bracket with a child would be expected to get the most back — $750 in average savings next year.
For the average single Canadian with no children in the top tax bracket, the PBO said the typical savings would be roughly $350 annually.
And a single senior in the first income bracket would get an average of $50 back next year. A single parent in the same tax bracket would save an average of $140.
The PBO noted that the lower an individual’s average income is, the less they can expect to save from a reduction in the first income tax bracket on a relative basis. Many low-income individuals also have existing tax credits to reduce their taxable income.
The Conservative Party said in a statement Wednesday that the tax savings on a monthly basis wouldn’t allow a low-income senior to buy a breakfast sandwich.
The Official Opposition accused Carney of tinkering “on the margins to save Canadians mere cents a day.”
The Conservatives promised a steeper income tax cut of 2.25 percentage points during the election campaign, though that plan would have been phased in over four years.
The Canadian Press reached out to Finance Minister François-Philippe Champagne for comment but has not yet received a response.
The PBO priced the cost of the Liberal tax cut at nearly $64 billion over five years, though the net cost would be closer to $28 billion after taking into account associated reductions in federal tax credits under the plan.
Finance Canada costed tax savings at around $27 billion over five years.
The Liberals tabled a ways and means motion last month that puts the tax cut in place starting July 1, but legislation to enact the change is still making its way through Parliament.
