Federal tax cuts since 2005 net Canadians $30 billion

Most tax savings have gone to low middle income earners


OTTAWA — Canadians are saving more than $30 billion in federal taxes— or a little less than $1,000 per person — due to tax changes introduced in the past decade, Canada’s budget watchdog says in a new report.

The calculation from the Parliamentary Budget Officer shows the accumulation of tax relief that has come about since 2005, when the then-Liberal government reduced the minimum income tax rate to 15 per cent from 16 per cent.

Since, the Harper government has raised the basic personal exemption, introduced the Child Tax Credit and Working Income Tax Benefit, pension income splitting and famously sliced two percentage points off the GST to five per cent, among other changes.

The result, says the PBO, is that personal income taxes are $17.1 billion lower today than they might have been, and Canadian consumers are paying about $13.3 billion less in value-added taxes on their purchases of goods and services.

The vast majority of the changes have occurred under the Conservatives, which took office in February 2006.

Prime Minister Stephen Harper, who along with the late finance minister Jim Flaherty, was often critical of the PBO when it was headed by Kevin Page, took credit Tuesday for the latest report as evidence the government is saving Canadians money.

The report is useful for the Conservatives heading into an election campaign in 2015 that it plans to run on management of the economy. With a balanced budget also likely in 2015, Conservatives are expected to introduce at least one more major tax measure — a variation of income splitting it promised during the election four years ago at a cost of about $2.7 billion.

Another gift to the government in the report was that the PBO found that in relative terms — lower income Canadians earning between $12,200 and $23,300 benefited the most, increasing their after-tax income by four per cent.

“We’re very proud to have reduced taxes by $30 billion … they have been progressive overall and they’ve most greatly impacted low, middle-income earners,” said Finance Minister Joe Oliver. “This has been a very progressive policy.”

But Dennis Howlett of Canadians for Tax Fairness quarrelled with the interpretation. He noted that in actual dollars, most of the savings when to Canada’s rich.

According to figures supplied by the PBO, the top 20 per cent of income earners got $10.9 billion, or 36 per cent of the total, while the bottom 20 per cent got $1.9 billion, or only six per cent.

“That’s a huge amount and who has got that money? Most of that in dollar amounts has gone to upper-income Canadians,” said Howlett.

“What this means is that while the lowest 20 per cent of income earners have gained less than $500 in tax reductions, the top 20 per cent have seen their taxes go down by almost $2,000 a year.”

The discrepancy might have been greater, but for some progressive tax measures introduced by the Conservatives, such as the Working Income Tax Benefit, which provides a refundable tax credit for low-income individuals. Households with incomes between $2,030 and $36,253 received about 60 per cent of $1.3 billion in savings from the measure.

The lowering of the GST rate was judged the “second largest income inequality improving measure instituted throughout the 2005-2013 period, second only to the highly-distributive Working Income Tax Benefit,” the PBO said.

In all, the government is expected to collect nearly $230 billion in tax revenue during the current fiscal year, so the reductions in taxes to individuals represent about 11 per cent from what the haul might have been without the changes.

The PBO did not calculate lost revenue due to corporate tax reductions because of what the office said was data limitations.

PBO director general Mostafa Askari says the numbers in the report are slightly lower than those claimed by the government because the PBO has attempted to factor in behavioural changes in response to tax cuts. For instance, individuals with greater after-tax income will tend to spend more, thereby generating more GST revenues.

In public statements, government ministers have said they have cut taxes 180 times, saving the average Canadian family of four nearly $3,400 in 2014.

The difference is largely attributed to the exclusion of the tax rate reduction introduced under the Liberal government of Paul Martin in 2005, which the PBO estimates resulted in a $3 billion saving for Canadians.


Federal tax cuts since 2005 net Canadians $30 billion

  1. Ahhh, one just for Dave!

    • I especially liked this part:
      the PBO says the lion’s share of the tax savings have gone to low middle income earners — households with incomes between $12,200 and $23,000.”

      OK Mr. Trudeau……..what are you going to run on now?

      • That’s a very low wage….and not the middle-class.

        • Emily, you miss the main point.

          The folks who could best use the money….are getting it. The folks who don’t need the money……are not.

          the PBO reports that Canadians have billions more in their pockets. Only you would consider that a bad thing.

        • You constantly crow about how tax cuts overwhelmingly benefit the wealthy, then when the data shows your assumptions to be entirely false, you claim that tax cuts should benefit the middle class and not the poor. Typical Liberal.

  2. the usual suspects aren’t going to like hearing this.

    NDP’ers, and Liberals…..start your spin.

    One finds that most people opposed to tax cuts……..are the same people who don’t pay taxes, or benefit from government largesse in one form or another.

    go Harper!

    finally a PM that understands families know best where their money should go…..not the beaurocrats and politicians.

    • Did you notice how your hero-Harp didn’t quite explain how much he let the uber-rick 5% off on their Taxable duties, … their loop-holes, …?
      …and, of course you/we will NEVER know, unless you/we are one of those uber-rich %5 of canadians, who’re soaking the sun in, and laughing to the banks.

      “go Harper!”, indeed.

      • Rickster….go back and re-read it.

        The rich are not the main beneficiaries of these tax cuts…..regardless of your theories.

        clearly, you are one of those folks who hate the rich…..simply because they have more skill, more talent, and frankly, more ambition than do you.

        You’re like an ugly fat chick who hates the cheerleader because she can get a date.

        Now go cash your welfare cheque and buy some weed for your days at the park.

  3. We know that cuts to taxes can be quantified.

    What’s really important is whether the curernt PBO will contineu the quest to get the documents Harper was hiding from him when they tried to dig a bit deeper into what was going on. If not,it’s a bit chilling.

    • ..there ya go. !

    • Yes, obviously the fact that the poor in Canada are benefiting more from tax cuts is “chilling”.

  4. It is interesting that there is no mention of the taxes that increased since 2005, particularly CPP. The maximum contribution in 2005 was $1861, it is $2425 this year. An increase of $564. There is also no mention of reduction in benefits to the OASP and CPP, which will impact many Canadians by $1000s per year.

    • Barfly-guy.

      If the tax cuts, are net higher than the tax increases, folks are still better off.

      as for CPP increases, that was necessary to ensure the fund is viable. The OASP was changed simply because people are living longer today.

      Ontario wants to create their own pension plan if Wynne is elected, and that will take another $125 from the pockets of taxpayers. Of course, Liberals…being Liberals, will just end up pissing it away on friviolous crap in any event…..and the current crop of politicians will be long gone before those waiting for the pensions realize the money isn’t there.

      It is hard for average folks to save for retirement….when people like Wynne take all of their disposable income from them.

      • @James
        “…Ontario wants to create their own pension plan if Wynne is elected, and that will take another $125 from the pockets of taxpayers. …”

        ahh, so really, where did you think we would get the money to take care of your/my Parents, grandparents,…. or are you moreso against helping the aged, other than letting them live off of cans of cat-food?
        Like I said, start with the big fat cats, overpaiod governmental CEO;s, …, overpaid PS hoarders of the economy.
        Our cost-of-living today, has far outpaced Harpo and his CONS’ “breadcrumbs”.

        “Go Harper!” ???

        • Rickster……I would go into more detail, however, it is clear that you have no idea about economics. cliff notes version for you:

          The Ontario Pension plan Wynne proposes, will take $125 EVERY MONTH from the average taxpayer. The idea being, that the person who pays this money, is the same person who will get it back. Clearly, that won’t be the case. It is a cash grab…plain and simple.

          If people are eating cat food, the chances are that they would NOT have to resort to such measures, if they were allowed to KEEP THEIR OWN MONEY and invest it in their own savings measures. That is the point you lefties don’t seem to grasp. If you let people KEEP THEIR OWN MONEY…..they won’t have to rely on Government doling it out in dribs and drabs.

          If you honestly think a Goverment (of any stripe) will give you back what they take away from you….you are sadly mistaken. Wynne will take the money, and waste it on other programs, or use it to subsidize their Energy Policy (failed policy) For every dollar the Liberals take away….you’ll get back pennies; if you get it back at all.

          No one is better at managing money….than the person who EARNS it. The person who earns the money knows the best place it can be used.

          Clearly, you are one of these folks who wants someone else to pay for your way of life.

          Here’s a hint Rick. No one wants to pay for your rent, food, bad habits, etc. It is ONLY YOU who want the rest of us to pay your way.

          If you want money….go out and earn it like the rest of us.

  5. Why don’t you add in those almost half-a-miliion immigrants/(TFW’s) that the CONS have brought in since 2005? -and there you will see how neatly, and statisically, the 30 Billion trickles down into the depths of obscurity. That break was mostly for them, on our behalf.
    The CONS, through that, just made it look like it was for us.
    The “real” money was saved upstream, and NOT downstream, to the avg 95% Canadians.

    -get a grip.

    • Rickster:

      The depth of your ignorance about economics is comparable to that of the Mariana Trench.

      If you don’t know what that is…..then grab a text on geography while you are looking for your Economics 101

    • You actually believe that non-Canadians pay Canadian income taxes, don’t you?

  6. So, we added $170 Billion to the debt to save $30 Billion and the government pounds itself on the back for it? Twisted!!