As part of our federal election coverage, Investment Executive explores the positions of the major federal political parties on the top issues affecting the financial services industry.

Here we look at where the parties stand on tax policy:

Both the Liberals and the Conservatives are promising tax cuts, although their promises differ in the targets and the size of the cuts.

Much of the Liberal plan was announced in the government’s November fiscal update, including personal and corporate income tax reductions. Personal income taxes would be cut through an increase in the basic exemption and a drop in the lowest marginal tax rate from 16% to 15%. This would represent an estimated $23.4 billion in tax cuts over five years.

The Liberals would also introduce modest middle-income tax reductions and corporate tax reductions that would represent another $6.8 billion over five years. The marginal rate on two of the lower personal income tax brackets would be reduced, and the threshold for the highest tax bracket would be raised. On the corporate side, the basic federal tax rate would drop from 21% to 19%, and the corporate surtax would be abolished.

The Liberals also have proposed cutting taxes on dividends to help reduce the tax advantage that income trusts have over traditional corporate structures.

Although the Conservatives are onside with the Liberals’ corporate tax and dividend tax cuts, they would not implement the personal income tax cuts proposed in November. Instead, they promise two big tax relief plans of their own: a reduction of the GST to %5 from 7%; and elimination of the capital gains tax for individuals on the sale of assets as long as the proceeds are reinvested within six months.

The Conservatives say their government would drop the GST to 6% immediately, saving consumers an estimated $4.5 billion annually; the rest of the reduction would be phased in over five years. Cutting a blanket consumption tax such as this should benefit lower-income Canadians most as it takes a proportionally bigger bite out of their take-home pay.

The proposed change to capital gains tax would defer the obligation, rather than eliminate it, but the idea should appeal to investors. And the Conservative party says it would eliminate capital gains tax on stocks donated to charities.

A Conservative government would also make other tax cuts. Small business taxes would be reduced: the threshold for the small business rate would be raised from $300,000 to $400,000, and the tax rate would be cut 11% over five years. The party estimates that, when fully implemented, these changes would cost the government $480 million a year. It also proposes a new tax credit to create an incentive for employers to hire new apprentices, among other steps.

The NDP opposes the Liberal plans for corporate tax cuts, but supports the cuts aimed at lower-income Canadians. It has pledged not to raise taxes. The party promises to study the tax system with a view to implementing “smart incentives” that would target growth and job creation, including: harmonizing federal and provincial tax and regulatory policies; accelerating depreciation rates for capital investment; providing incentives to develop environmental technologies; harmonizing the federal capital tax rate; and offering incentives to promote workforce training.

Among the other parties, the Bloc Québécois also favours targeted tax reforms. It proposes: a surtax on the profits of major energy companies; abolition of the GST on diapers and other infant products; and tighter enforcement of tax rules, including a crackdown on the use of tax havens. The Bloc also supports increasing federal transfers to support education and other social programs in Quebec by $2.75 billion over three years.

The Green Party’s tax reform proposals include: cutting personal income taxes for Canadians earning less than $45,000 per year; closing tax haven loopholes; studying corporate tax competitiveness between Canada and the U.S.; and establishing a new Parliamentary Budget Office to provide independent public estimates of government revenues and expenditures.

The Conservatives also would consider the creation of an independent budgeting authority to provide more accurate estimates of the nation’s finances.