Liberals introduce tax cuts and hikes

OTTAWA— Millions of Canadians will get a break when they file next year’s income taxes, the Liberals said as they moved to quickly fulfil a key election campaign promise.

Many couples will see an average income tax saving of $540 a year, with single individuals saving $330 annually on average, from the tax changes introduced by Finance Minister Bill Morneau on Monday.

But Canadians earning more than $200,000 a year will see their income tax bill rise as a result of a higher 33-per cent tax rate, the Liberal government said.

Morneau also said the Liberals, in keeping with their election platform, will return the annual contribution limit for Tax Free Savings Accounts to $5,500 from the current $10,000 — effective as of 2016.

Morneau tabled a notice of ways and means motion in the House of Commons to set in motion the plan to have the tax changes effective on Jan 1.

During the election campaign, the Liberals said the tax increase on the richest 1 per cent of earners would pay for the “middle-class” tax cut. But the accounting released Monday indicated the tax-reduction measure will cost Ottawa $1.2 billion a year as of 2016 — which could add to the government’s projected $9.8-billion budget deficit that year.

However, analysts say the major tax breaks from the Liberal plan will for the most part go to those at the upper end of the earnings scale — as long as they are below the top tax bracket. The NDP calculated that those making less than $50,000 a year, for instance, will save only a few dollars from the tax cut, while those earning more than $80,000 annually will get a$600-plus yearly reduction (as long as they do not fall into the top tax bracket).