A federal income tax cut pitched by Prime Minister Mark Carney as a major affordability measure will save low-income Canadians roughly $11 a year, senators heard this week, despite the measure carrying a $5.8 billion annual cost.Blacklock's Reporter says Bill C-4 reduces the tax rate on the first $57,375 of taxable income from 15% to 14%. Carney claimed during the April 28 campaign that the change would benefit a two-income family by “up to $825,” but economists told the Senate national finance committee the numbers don’t add up.David Macdonald, senior economist with the Canadian Centre for Policy Alternatives, said most low-income Canadians will see almost nothing. “The drop in the bottom bracket rate has been pitched as an affordability measure but provides effectively no benefit to those in poverty and little benefit to those in the middle class,” he said.“For those living in poverty, the lowest bracket shift provides an average benefit of $11 a year,” Macdonald testified. .“The lowest income tax filers already have enough credits to reduce their taxable income to zero, so you can change the tax rate but it won’t matter as they do not pay income taxes to begin with.”Higher-earning Canadians stand to gain far more. Macdonald said the top third of tax filers will receive an average of $300 annually, while middle-income earners will see about $184. He noted that nearly $6 billion is being spent on a tax change that sends only 3% of its benefits to the bottom third of income earners.Macdonald contrasted the spending with what he said were more effective options, arguing that the same money could have increased the Canada Disability Benefit to $7,000 a year and lifted more than 200,000 people with disabilities out of poverty..Finance Minister François-Philippe Champagne defended the bill earlier at the House of Commons, saying the tax cut would “deliver real change by cutting taxes for Canadians, bringing down costs and putting more money in the pockets of Canadians.” MPs backed the measure unanimously in a 335-0 vote.“This is about Canadians,” Champagne said. “They want us to do bold things. They want us to do them quickly.”
