Trudeau unveils Liberals' major economic plank

Liberal Leader Justin Trudeau makes a policy announcement during an event at a restaurant, Monday, May 4, 2015 in Aylmer, Que.. (Adrian Wyld / THE CANADIAN PRESS)

Liberal Leader Justin Trudeau has released his economic plank ahead of the fall election, saying his government would introduce an income tax cut for the middle class and raise taxes for the wealthiest one per cent.

Promising to “bring back fairness,” Trudeau said the Liberals would reduce the 22-per-cent tax rate for middle-income earners to 20.5 per cent. The tax cut would apply to anyone with a taxable annual income between $44,701 and $89,401, and would amount to $3 billion per year.

To pay for that, Trudeau said the Liberals would create a new tax bracket of 33 per cent for those earning more than $200,000 a year.

Trudeau also proposed a new “Canada Child Benefit,” which would give families up to $6,400 annually for every child under six and up to $5,400 annually for children aged six to 17. The benefit would vary, depending on the family’s income.

“A typical family of four earning $90,000 a year will receive a monthly cheque of $490, tax-free,” Trudeau told a room of supporters in Gatineau, Que.

“Under the Harper plan, that family gets about $275 a month,” he added.

Trudeau called Harper’s economic plan a failure over the past decade.

“We are not getting the economic growth, and we're not getting fairness and success for the middle class," he said.

“We can do more for the people who need it, by doing less for the people who don’t."

Trudeau has previously said that he would scrap the Conservative government's plan to allow income splitting for couples with young children for tax purposes. He said that would only benefit wealthy Canadians.

Trudeau has also said that he would reverse the plan to nearly double the amount Canadians can put in tax-free savings accounts every year. The federal budget tabled last month raised the annual TFSA contribution limit to $10,000 from $5,500.

Employment and Social Development Minister Pierre Poilievre called Trudeau’s plan to scrap the increased TFSA contribution limit a “tax increase” for Canadians in the lower income brackets.

“Almost two-thirds of people who max out their tax-free savings accounts earn less than $60,000 a year. It’s them that we are helping by expanding their tax-free savings (accounts),” Poilievre said during question period Monday.

“It is them that the Liberal leader would target with his tax increase that he announced today. That is the Trudeau tax.”

Conservative MP Scott Armstrong later told CTV’s Power Play that Trudeau’s plan has a “$2-billion hole,” which means a Liberal government would have to “increase taxes somewhere” to cover it.

Trudeau's proposed new child benefit would cost an additional $4 billion a year. It would be paid for, in part, by getting rid of the Conservatives’ $2-billion income-splitting plan.

The NDP is also questioning where the other $2 billion will come from.

The party’s finance critic, Nathan Cullen, told Power Play that Trudeau’s numbers “don’t work out at all.” He also criticized the Liberals for leaving out low-income Canadians out of Monday’s announcement.

The Liberals did say Monday that they will be rolling a “fully costed” economic platform in the coming weeks, including more measures for families and Canadians who earn less.

With files from The Canadian Press