It isn’t money in your pocket yet, but the Liberal promise for a tax cut for middle-income earners was called an “immediate priority” in the throne speech Friday.
For the tax cut to take effect on Jan. 1, the change needs to be introduced in the House of Commons, but its top billing in the brief speech by the Governor General signalled its importance to the new government.
The cut was a key campaign commitment by the Liberals. It is expected to be offset in part by an increase in income tax on the country’s highest earners.
“This is the fair thing to do, and the smart thing to do for Canada’s economy,” Gov. Gen. David Johnston said in the speech.
During the election, the Liberals promised to cut the rate on the middle-income tax bracket — taxable income over $44,701 up to $89,401 — to 20.5% from 22%. It estimated the cut would save up to $670 per person.
However, the party also said it would create a new high-income tax bracket for people making more than $200,000 that would be set at 33%.
The tax cut for middle-income earners won’t help those in the lowest tax bracket, but the government also made its new child benefit a key initiative in the throne speech that will help them if they have children.
The plan is expected to replace the universal child care benefit with a new program that will reduce the payments families receive as household income rises.
Promises to strengthen the employment insurance system and work with the provinces and territories to enhance the Canada Pension Plan also rated a mention in the speech.
The Liberals also campaigned on a plan to cancel income-splitting and roll back contribution limits to tax-free savings accounts, but they were not mentioned in the speech.