Monday June 30, 2025 | VICTORIA, BC
Political analysi sby Mary P Brooke | Island Social Trends
A middle-class tax cut was a high profile Liberal promise in the recent federal election campaign.
Today ahead of Canada Day, Prime Minister Mark Carney reminds voters that in the spring session his “new Liberal government” brought in a tax cut in the recent spring sitting of the 45th Parliament.
The tax cut will come into effect on July 1, 2025. That’s for application in the 2025 tax year. You’ll be filing that in 2026. The financial gain for families, if any, will come mid-2026. Hardly an affordability measure for people who are struggling now.
The cut is promoted as saving a two-income family up to $840 a year; that’s on average about $420 per working individual — but we note that the promotion of the tax is always about a two-income family. That presumes that people have steady employment and it leans to a social norm of a two-earner household that is not the case for many Canadians.
Carney’s office today says that 22 million Canadians will benefit by the tax cut. It’s not a large amount. When King Charles III read the Throne Speech on May 27 he seemed to react at the tax promise number — it’s small.
“By reducing income taxes, Canadians can keep more of their paycheques to spend where it matters most,” it was stated in a news release today from the prime minister’s office.
This is a different approach than the previous Liberal government (under then Prime Minister Justin Trudeau) which focussed on people who have become stuck in the economic system and require supports for their month-to-month reality. A tax cut is not of much help for them, if they are eligible at all. The keyword “affordability” is not mentioned a whole lot in the Carney lexicon.
The Carney approach is to appease middle-class taxpayers who felt left out during the Trudeau years. Trudeau tried to placate that sector with the two-month GST rebate from Dec 2024 to Feb 2025 (which set off the Chrystia Freeland resignation and the fast downslide for Trudeau and the Liberals into a leadership race).
Adjustments to the Employment Insurance system toward a basic income would help more Canadians. That would stabilize the work force and soften the blows of the overall Canadian economic lifestyle.
Analysis:
Meanwhile, the Carney government says it is focussed on “bringing down costs, keeping communities safe, diversifying trade, and building one Canadian economy”. Rebuilding the economy is obviously required; Canada has had low productivity since 2000.
The economy needs investment and more well-paid jobs; that’s a longer-term goal that will help households in the long run. But in the short run it’s yet unclear whether Carney will continue the low-income supports that keep some families from the brink of failure.
In the wake of a promised increase in defence spending (up to 2% of GDP by March 31 2026) voters will want to watch what Carney might cut elsewhere in the budget. NATO expects an increase to 5% of GDP in the years ahead; that would be a big stretch ($150 billion per year) for Canada.
There is no Carney Liberal government budget yet. So far, it’s promised for September 2025. The House of Commons fall sitting starts September 15.
===== RELATED:
- Liberal MP Will Greaves emerges in Victoria political scene (June 27, 2025)
- Canada commits to NATO declaration on defence (June 25, 2025)
- A win for Carney with passage of Bill C5 One Canada Act (June 22, 2025)
- Canada’s 45th Parliament Throne Speech delivered by King Charles III (May 27, 2025)
- NEWS SECTIONS: 45th PARLIAMENT OF CANADA | LIBERAL PARTY | CANADA DAY | BUSINESS & ECONOMY