The New Democrats have been running a campaign aimed at undermining the message that the Oct. 21 election is about a choice between the Liberals and Conservatives, positioning themselves as the party that is “in it for you.”
That strategy has the NDP making promises to Canadians who are having trouble getting by, including when it comes to the costs of medication and dental care, but it also involves portraying the Liberals and the Conservatives as caring more about the wealthy than they do average Canadians.
That would be one reason why NDP Leader Jagmeet Singh took aim at Conservative Leader Andrew Scheer on Monday.
“He will reduce taxes, yes, but for the richest, not for ordinary people,” Singh said at a campaign stop in Bathurst, N.B.
The truth, however, is that the Conservatives are promising to lower personal income taxes for everyone who pays them.
The NDP did not respond to a request for comment asking which tax cuts Singh was referring to.
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But last week, the Conservatives unveiled a proposal to decrease the tax rate on the lowest federal income bracket — the one for income between $12,310 and $47,630 per year — from 15 per cent to 13.75 per cent over the next four years.
The Canadian tax system is a progressive one, meaning that people are taxed at different tax rates on different shares of income. Everyone is exempt from paying federal taxes on the first $12,069, which is known as the basic personal amount.
The marginal tax rates then go up, bracket by bracket. There are five of them.
The first bracket (from $12,069 to $47,630 of taxable income) is taxed at 15 per cent in 2019.
The next bracket (on taxable income from $47,630 up to $95,259) is taxed at 20.5 per cent.
The very highest (on taxable income above $210,371) is subject to a 33-per-cent tax rate.
Will those who are in the highest income bracket benefit from the promised Conservative tax cut?
Yes, they will, but in absolute dollar terms, they will save about $440 — the same as anyone else making at least $47,630 per year.
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David Duff, a professor of tax law at the Peter A. Allard School of Law at the University of British Columbia, said it is true that those whose total annual incomes are below $47,630 would benefit a little less, because not earning as much translates into not as much taxes being saved from the cut.
People whose incomes aren’t high enough to be taxable would see no benefit.
The value of tax credits, currently applied at the 15-per-cent rate, would also decrease with the change.
That is a different thing from saying ordinary people would not benefit from the cut.
“He’s not right to say it benefits only the rich, unless you say everybody who earns more than ($47,630) is rich,” said Duff.
Stephen Gordon, an economist at Laval University in Quebec City, said Singh would have been right to claim the proposed income tax cut would not do much to help those living in poverty, as many earning the lowest incomes in Canada are already not paying taxes.
But that is not what Singh said, Gordon noted, and if we assume “ordinary people” means those earning middle incomes, there is evidence they would benefit quite a bit.
Lindsay Tedds, an economist at the University of Calgary, noted the average income in Canada in 2017 was $46,700, and the median income was $35,000, according to data available through Statistics Canada.
“This benefit accrues to more than people who are ‘rich,’ ” she said.
The Conservatives say someone earning the average income of $46,700 would receive $433 in tax savings under their plan, which is pretty close to the maximum benefit.
Is it correct to say that wealthy people will also benefit from this tax cut? Yes. Is it accurate to say that only the rich will benefit? Not at all.
For this reason, the statement by Singh earns a rating of “full of baloney” — the statement is completely inaccurate.