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ALBAS: Tax cuts for the middle class needs definition of middle class

Dan Albas, member of Parliament for Okanagan-Coquihalla.
Image Credit: Contributed
November 25, 2016 - 12:00 PM

OPINION


Editor,

Generally speaking Canadians tend not to hear much in the media about our Canadian Senate unless it involves a Senator spending scandal. I mention this because this week a group of Conservative Senators on the Senate Finance committee made the rare and unusual decision to amend a Government spending bill in a way that may be of some interest to citizens.

As many will recall during the last election one of the Liberal promises was a plan to reduce income taxes on the middle class that ultimately would be revenue neutral as a result of income taxes being increased on citizens who earn over $200,000 per year. Credit to the Liberal Government as they have been in the process of enacting some of their electoral promises however it has been done in a manner that some take disagreement with that ultimately has resulted in the Senator amendment in question.

One challenge in enacting tax cuts for the middle class is defining who exactly is the “middle class” from the perspective of the Liberal Government. In this case many were surprised that the proposed tax cuts for the middle class did not apply to most in need Canadians earning below $45,000 per year. More surprising was that the same middle class tax cuts also applied to citizens earning between $100,000 up to $199,000 per year. I have yet to hear any citizens supporting a tax cut for citizens earning close to $200,000 annually. As it turns out, when citizens in the $100,000 to $199,000 income level are included in the ‘middle class’ tax cut it turns out the plan is not in fact revenue neutral as was promised. Overall the cost of the Liberal middle class tax results in an annual deficit ranging between $1.2 Billion and possibly as high as $1.7 Billion each year. As the annual budget is currently forecasting deficits for the duration of the Liberal Government term these tax
cuts are in fact unsustainable– this is where the Conservative Senator`s amendment comes in.

Ultimately the amendment from Senator Larry Smith proposes to eliminate the tax cut for citizens earning above $90,000 so in that respect those earning between $100,000 up to $199,000 would no longer see an income tax cut if the amendment was adopted. The amendment further proposes to increase the tax cut for those earning between $45,000 up to $53,000 and would keep the existing tax cut for those earning between $53,000 up to $90,000. It should also be noted that this amendment is also revenue neutral meaning that it would not add an additional $1.2 to $1.7 Billion in new debt annually.

At this point it remains unclear if the Senate will support this amendment however it will provide a test for those newly appointed non-partisan Senators to see if they blindly vote against this amendment in favour of the original Government Bill or not. In the event the Senate does pass this amendment it would return to the House of Commons for a vote from elected MPs. My question to citizens is what are your thoughts on this amendment? Does it make sense to increase the income tax cut for lower income citizens and eliminate the income tax cut for those earning between $90,000 up to $190,000 and eliminate the deficit created by this in the process? Or should un-elected Senators oppose the amendment and support the Liberals tax cut as is, given that it was a campaign promise that provided a mandate for these changes, despite not being revenue neutral as was promised.

As always I welcome your comments, questions and concerns on this subject or any other before the House of Commons. I can be reached at Dan.Albas@parl.gc.ca or toll free 1-800-665-8711.


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