Federal election 2025 comes with tax cut promises — will it really help Canadians?
We’re in the thick of federal election season in Canada, and tax cuts are a major talking point on the campaign trail.
The cost-of-living crisis is certainly a hot-button issue this federal election, with 85 per cent of Canadians saying they’re living “paycheque to paycheque.”
From housing prices to grocery costs, voters are feeling the pinch. The political parties in Canada are offering tax cuts as a solution, but experts argue that these measures will not be sufficient to combat the cost-of-living crisis.
Daily Hive spoke with Francisco Remolino, a Toronto-based licensed insolvency trustee at Remolino & Associates, and Stacy Yanchuk, the CEO of Alberta-based non-profit credit counselling agency Money Mentors, to break through the parties’ messaging on taxes.
Before we delve into their takes, here’s a recap of what major party leaders are promising.
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Liberal tax platform
Prime Minister Mark Carney began the Liberal campaign by promising to cut the rate on the lowest tax bracket by one per cent. This is supposedly designed to save middle-class, dual-income families up to $825 a year.
This is in addition to the federal government’s axing of the consumer carbon tax, eliminating the GST on home sales up to $1 million, and introducing new temporary EI measures.
Conservative tax platform
Conservative Party leader Pierre Poilievre announced he would drop the tax rate on the lowest bracket from 15 per cent to 12.75 per cent. The party suggests that the average Canadian earning $57,000 would save $900, and dual-income families would save $1,800 a year.
In addition to the tax cut, Poilievre also announced the Canada First Reinvestment Tax Cut, which allows any person or business to defer capital gains tax if they reinvest their earnings in Canada.
NDP tax platform
NDP leader Jagmeet Singh is promising to cut taxes by raising the basic personal amount to $19,500, which would supposedly save workers and families earning less than $177,882 about $505.
He also plans to permanently remove the GST from essentials like groceries, diapers and monthly cell, internet and heating bills. Lastly, the party promises to double the Canada Disability Benefit and raise the Guaranteed Income Supplement to help seniors out of poverty.
“Not going to impact someone’s bottom line”
Remolino says these promises are typical during an election, but stresses that these plans won’t help lower-income individuals.
“It will have very limited benefits for those who pay little to no income tax, which is a big part of the segment of our population,” he explained.
Yanchuk says she calculated minimal savings of about $500 to $1,200 per year, or $50 and $100 per month.
“That’s not going to impact someone’s bottom line that much because it’s just not deep enough,” she told Daily Hive.
She says the government would have to implement steeper tax cuts if it really wanted to help Canadians.
“Someone has to pay for that, so I don’t think that’s always the best lever to pull on, but again, it’s a great lever to pull on for elections,” she said.
Remolino adds that while the middle class may see some benefits from the proposed cuts, these benefits may only be short-term.
He argues that cutting rates will do little to actually mitigate or offset the current cost of living expenses.
Long-term solutions
Remolino says the cost-of-living crisis involves social issues that require long-term policies and strategies addressing them on a larger scale.
He believes the federal government needs to provide more, or increase existing benefits and credits, so that Canadians can better cope with their current economic challenges.
He gives the example of upping the GST credit for lower-income individuals and creating housing credits to help people afford a roof over their heads, especially in cities with higher home and rental prices.
Remolino says that as an insolvency trustee, he has seen the aftereffects of COVID as the cost of living increases while incomes plateau, or even decrease in some cases.
“Therefore, the ability to pay their living expenses and continue with paying any debts they may have accumulated after COVID is being challenged,” he explained.
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He shared a story about one of his clients who is in her 70s and was $40,000 in debt after COVID. Her only income was from the Canada Pension Plan and Old Age Security, so they determined the bankruptcy was the best option for her. He says she’s a good example of someone with limited income who would benefit from a boost in social assistance.
Yanchuk says that when it comes to solving housing affordability specifically, the government needs to support rent assistance and rent banks.
Rent banks provide interest-free loans to low-income households experiencing financial struggles and unable to afford their rent or utilities.
“Instead of moving them into a homelessness situation, we would actually pay it because it’s cheaper to pay that and keep someone in their home than it is to now deal with the costs of homelessness,” she explained.
She adds that the government should consider tax breaks for alternative housing arrangements. An example she gave is a grandma who lives in a three-bedroom, three-bathroom home by herself, receiving a property tax incentive for welcoming in students or a new family into her home.
Yanchuk also wants to see more income support, like the expansion and improvement of Employment Insurance programs, GST rebates, and the Canada Workers Benefit.
Similarly to Remolino, the Money Mentor CEO sees many cases of Canadians falling into debt.
“We see folks that have lost their jobs, or household income has gone down,” she said. “It just takes one job loss and your budget is blown out of the window for most Canadians within a month.”
Ultimately, both experts are urging Canadians to get informed, question the real impact of what’s proposed on the campaign trail, and go out and vote.
Advance polls open across Canada for a limited time period, beginning Friday, April 18. Read Daily Hive’s guide about voting early or voting for the first time.