Conservative senator proposes tax hike for higher incomes

The Senate finance committee has voted in favour of lowering taxes for middle-class people while raising taxes on wealthier Canadians.

Conservative Senator Larry Smith, chair of the finance committee, proposed changes to the Liberals’ middle-class tax cut that he says will also eliminate an expected government revenue cut that would be the result of the Liberal’s original plan.

Read: “Mad Max” proposes flat tax

In an October meeting, senators on the finance committee heard from Parliamentary Budget Officer Jean-Denis Fréchette, who calculated that the tax bracket changes would cost the government $1.7 billion in forgone tax revenue every year.

Smith wants to close that gap by raising federal taxes on people making more than $90,563, but lowering them for people making less than that.

In committee today, Smith proposed that income between $45,282 to $52,999 be taxed at 16.5%, and income from $53,000 to $90,563 be taxed at 20.5%. (Hear him read the details at 10:59:52 in the video.) But if the taxpayer makes more than $90,563, she would pay 22% tax on income between $45,282 to $90,563 — essentially bifurcating the available tax brackets based on total income, which diverges from the rest of Canadian tax policy.

The motion passed 9-3.

Watch the Senate debate here (starts at 9:41:37).

Now that Bill C-2 has been amended by the finance committee, it will return to the full Senate, which will vote whether or not to accept the bill. At that point, the amendment could be voted down.

“It is extremely rare for the Senate to amend a government bill,” reports the Globe and Mail. However, there are now 44 independent senators, more than either the Liberal or the Conservative party. It’s unclear how the new Senate dynamic will affect the amendment’s chances of being passed by the Upper Chamber.

If the change survives, the entire bill would go back to the House of Commons for approval, where the governing Liberals have a majority. It’s unlikely, therefore, that the bill would pass an MP vote.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.