Speech on Measures to Strengthen the Middle Class
December 7, 2015 - Ottawa
Check against delivery
Thank you for joining me today. Today I am delivering an important element of the platform Canadians embraced—restoring economic growth to the middle class.
On October 19th, Canadians gave us a strong mandate to take a new approach. We promised to strengthen the middle class and put more money in their pockets to save, invest and grow the economy. Fundamental to that plan was greater tax fairness for the people who need it most—the middle class.
Today in the House of Commons I tabled a Notice of Ways and Means Motion. This motion contains several proposed measures that would take effect on January 1, 2016 and for subsequent taxation years.
The first is a tax cut for the middle class. We will reduce the 22 per cent income tax rate to 20.5 per cent. This middle class tax cut will benefit about 9 million Canadians each year. Single individuals who benefit will see an average tax reduction of $330 every year, and couples who benefit can expect an average tax reduction of $540 every year.
This change is about giving the middle class a fairer deal. To that end, we are also asking that Canadians who have the most contribute a little bit more.
For those in that privileged group, a new proposed tax bracket of 33 per cent will apply to individual taxable income beyond $200,000.
These measures will result in greater fairness across the tax brackets.
I am also formally announcing that the annual contribution limit for the Tax-Free Savings Account will return to $5,500 from $10,000 as of January 1, 2016.
In addition, indexation of the TFSA annual contribution limit will be reinstated so that the annual limit maintains its real value over time. Canadians should also be aware that the changes to the TFSA will not affect the 2015 contribution limit.
I want to underline that today’s measures are just a first step.
We want to give families more money to help with the high cost of raising their kids. Canadians can expect we will move forward in the next budget with a proposal to create a new Canada Child Benefit—one simple, tax-free, and more generous benefit targeted to families who need it most. Canadians will begin receiving payments under the new Canada Child Benefit in July 2016.
We will also introduce legislative amendments to repeal income splitting for families with children, beginning in 2016 and for subsequent taxation years.
Our program of tax cuts for the middle class is an investment that will lead to a more prosperous, inclusive and sustainable economic future.
Economic growth requires giving everyone a real and fair chance to succeed.
We will continue to work together with Canadians to implement our platform for real change, which includes investing in our economy, our communities and in Canadians themselves. That means transformative investments in infrastructure and a new plan for a strong middle class.