MIDDLE- CLASS FAMILIES PAYING MORE TAX, NOT LESS: REPORT.

• Middle- class families in Canada are payi ng higher i ncome taxes compared to a few years ago, despite claims by Ottawa that it has eased the tax burden on this income group, says a new report.

Vancouver- based thinktank The Fraser Institute said on Tuesday 60 per cent of the 3.88 million families included in its study are paying higher income taxes under the current government.

Of those included in the middle- income bracket, 81 per cent are paying higher total income taxes after the changes, an average of $840 more per year.

The report comes amid a furor in Ottawa over a recent Liberal proposal to alter tax rules for Canadian private corporations and businesses.

The opposition Conservatives have been seizing on the disquiet from some business owners and professional associations, framing the tax proposals as an attack on the middle class.

The proposed changes would effectively do three things: limit income- splitting within corporations, raise taxes on some portion of internal passive investments and place new restrictions around capital gains exemptions. Farmers, doctors and other groups have been highly critical of the changes, saying they will deter investments and place undue tax burden on them.

Consultations on the recent proposals will conclude early next month. The Fraser report did not account for those recent proposals, and instead focused on earlier tax changes that have already been implemented.

Ottawa has taken steps in recent years to add to the tax burden on high- wealth individuals while scaling back taxes on the middle class. In 2016 it pared back its second-lowest rate, which applies to Canadians with annual salaries between $ 45,916 and $ 91,831, to 20.5 per cent from 22 per cent. It also hiked tax rates on those earning more than $ 202,800, to 33 per cent from 29 per cent.

But those changes have come alongside the removal of various tax credits and the Harper-era income-splitting policy, which have on the whole raised income taxes on the middle-class, the Fraser report says. Ottawa has so far scrapped public transit credits, children’s fitness credits and education and textbook credits.

“The government in its communications is not talking about these tax credits, it is only talking about the rate reduction. And that’s why they’re wrong in their assessment,” said Charles Lammam, the Fraser researcher who wrote the report.

“It’s important to look at all of the tax changes, because if you don’t you’ll get a very incomplete picture of the impact on middle- class families,” he said.

Lammam’s report analyzed income taxes for 3.88 million Canadian couples with at least one child. The families were broken into five categories. Eighty- one per cent of those earning in the middle income bracket, between $77,000 and $107,000 annually, are paying higher income taxes after the recent changes. Of the second-lowest quintile, earning between roughly $51,000 and $77,000, 69 per cent are paying higher overall income taxes. The highest quintile, earning over $150,000, saw just 51 per cent pay higher income taxes.

Lammam says Ottawa’s current proposals on private corporations and businesses are likely to raise the overall income taxes of many of the same middle- income earners by removing certain tax structures.

However, there is debate as to how many small business owners will be impacted by the proposals, particularly the changes to passive investments.

A poll conducted by Angus Reid Institute last week found that fewer than half of the 852 business owners surveyed said they would be negatively impacted by the passive investment changes. Of those, 42 per cent said it would hurt their business, while 55 per cent said the changes are unfair.

Forty- four per cent said the income sprinkling proposals were unfair, while 24 per cent said it would have a negative impact.