OTTAWA – A Senate committee has amended the Trudeau government’s signature tax bill to cut taxes even more for some middle-income earners.
The amendment changes the tax brackets in Bill C-2, which is supposed to deliver on Prime Minister Justin Trudeau’s campaign promise to reduce taxes for middle class Canadians while making the wealthiest pay more.
As originally written, the bill would reduce the tax rate to 20.5 per cent from 22 per cent on income between about $45,000 and $90,000 and impose a new tax rate of 33 per cent on income above $200,000.
Those changes actually went into effect last Jan. 1 as one of the first actions of Trudeau’s fledgling Liberal government and bill would formally enshrine them in legislation.
But the Senate’s national finance committee has adopted an amendment which chairman Larry Smith says would better target the tax savings at middle income earners who need it most.
His amendment would set a rate of 16.5 per cent on income between $45,000 and $52,999, with the 20.5 per cent applying from there up to just over $90,000.
That means Canadians with taxable income of $48,000 would get a tax saving of $190, more than double the $81 contemplated by the bill as originally written, said Smith, a Conservative,
Someone earning $60,000 would get $570 instead of $261 and a person earning $89,000 would get just over $1,000 instead of just less than $700.
Smith called the changes passed Tuesday “a significant improvement to the actual area where the prime minister wanted to benefit, middle-income Canadians.”
Some of his committee colleagues opposed the amendment, saying they didn’t have any time to study it or call experts to comment.
Finance Minister Bill Morneau said it’s “surprising” that a Senate committee would change a bill that implements a change specifically promised during last year’s election campaign.
The amended version of the bill must now go to the full Senate for a final debate and vote. Should the Senate approve the altered bill, it would have to go back to the House of Commons, which would have to decide whether to accept or reject the unelected upper house’s changes.
Morneau did not give a direct answer when asked how the government would respond to an amendment from the Senate, but he hinted broadly that it would be rejected.
“We believe that the tax reductions that we’ve made for nine million Canadians are positive and fair and simple, so that’s where that ends,” he said.
“To be clear, we’re pleased with what we’ve done. We believe that the outcome that we’ve gotten to in this bill is the right outcome. It’s helping Canadians with lower taxes and it’s done in a simple way.”