Since 2005, federal tax cuts have resulted in a significant reduction in the federal taxes that Canadians pay.
In a report released on May 27, the Parliamentary Budget Officer (PBO) found that Canadians are paying $30 billion less in federal taxes this year – or a little under $1,000 per person – compared to 10 years ago.
The PBO report examined tax changes between 2005 and 2013 for two of the three largest components of federal tax revenue: personal income taxes and the HST. The report concluded that Canadians are now paying $30 billion less in federal taxes ($17.1 billion less in federal income tax and $13.3 billion less in HST) this year compared to 2005, a result of federal tax cuts.
As a result, each Canadian will pay an average of almost $1,000 less in federal taxes this year compared to 2005. A typical Canadian family of four is now saving nearly $3,400 in federal taxes each year compared with 10 years ago.
Through the introduction of tax measures such as the Universal Child Care Benefit, Family Caregiver Benefit, Child Tax Credit, Children’s Fitness Credit, Registered Disability Savings Plan, Tax Free Savings Account, pension income splitting for seniors and increasing the amount Canadians can earn without paying tax, the government has helped Canadians save more of their take-home pay, benefitting middle-income individuals and families the most through a four per cent increase in after-tax income.
Furthermore, to assist low-income households, the introduction of the Working Income Tax Benefit has provided a refundable tax credit for individuals with an earned income in excess of $3,000. This tax credit provides $925 for single individuals without dependents and $1,680 for couples and single parents and continues to increase each year at the rate of inflation. The Working Tax Income Benefit, along with the two point reduction in HST, has played a significant role in reducing income inequality across the country.
Despite global economic sluggishness, Canada has seen strong economic growth. Since the peak of the recession, 1.1 million jobs have been created, with more than 80 per cent of those jobs in the private sector and two-thirds in high-wage industries. As a result, the net worth of Canadian families has increased over 44 per cent over the last 10 years, resulting in one of the most affluent middle classes in the world.
These tax reductions have been implemented in a fiscally responsible manner.
To find out more information on the government’s tax reductions and available tax credits and benefits, please visit: http://goo.gl/bChZVm.