Evidence of meeting #13 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rate.
A recording is available from Parliament.
General Director, Tax Policy Branch, Department of Finance
What I can say is that 8.7 million taxpayers, or 31% of the population, are in the first tax bracket.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
We have to consider that the population whose income is at a level where they do not pay tax are Canadians who will not benefit from the tax cut for the middle class.
Can you tell me what proportion of Canadians are below the first bracket?
General Director, Tax Policy Branch, Department of Finance
Thirty-five per cent of Canadians do not pay tax.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thirty-five per cent, you say. What percentage is in the first bracket?
General Director, Tax Policy Branch, Department of Finance
Thirty-one per cent.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
So that is 66% of the population that will not get a penny from the tax cut. In my opinion, this is fundamental. You mentioned, and your argument is entirely valid, that among those people, some benefit from tax credits. Some are refundable and others are not, like the GST credit, for instance. That will have an effect.
If you look at people whose income is higher, those who earn $200,000, they will still benefit from this measure. At $210,000, you still benefit from a tax cut, despite the fact that you will be paying a little more tax because of the creation of an upper bracket. People who earn $210,000 have access to tax advisors and a whole series of measures or opportunities to reduce their taxable income.
We are talking about a tax credit for the middle class. Someone who earns $210,000 will see a reduction, but if you compare that to someone who earns $42,000, $43,000 or $44,000—who in my opinion qualifies as a member of the middle class far more than someone who earns $210,000—the tax cut is not meeting its objective, in my opinion. I know that this is a political argument, and I am not asking you to answer it.
I will probably conclude with a question Mr. MacKinnon asked at the outset, regarding the communication plan, or how you intend to publicize this tax reduction. Is publicizing tax measures like this one a part of your policies, whether we are talking about the Canada Revenue Agency or the Department of Finance?
General Director, Tax Policy Branch, Department of Finance
One of the responsibilities of the Canada Revenue Agency is to inform Canadians about their obligations regarding tax and also about the new rules if they change, if taxation rates change and if there are various other changes. That is a part of the responsibilities of the agency. Canadians have to know what is going on.
NDP
General Director, Tax Policy Branch, Department of Finance
As I said in the beginning, it is mostly done through the agency's website. It is its main means of communication.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Excuse me, but I would like you to repeat what you just said.
General Director, Tax Policy Branch, Department of Finance
As I said in the beginning, I will get back to you with some more detail on this, but according to what I understand, the main way in which the Canada Revenue Agency communicates with taxpayers is through their website.
Liberal
The Chair Liberal Wayne Easter
I believe Mr. Jovanovic mentioned earlier that they would be providing the committee with the information on how they intend to communicate that.
Mr. Champagne.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Thank you, Mr. Chair.
Good afternoon, Mr. Jovanovic. Thank you for being here with us this morning.
Can you confirm the following? Only 6.7% of the 11 million Canadians who have a TFSA made the maximum contribution of $41,000.
General Director, Tax Policy Branch, Department of Finance
We are talking about 2 million people out of 11 million.
Liberal
General Director, Tax Policy Branch, Department of Finance
It represents a little less than 20%.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Agreed.
I am going to ask you to confirm certain figures.
You said earlier in your testimony that 10 million Canadians do not pay income tax in Canada. Is that correct?
General Director, Tax Policy Branch, Department of Finance
Yes, that is correct.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
You also said that nine million Canadians will benefit from the tax reduction in the second tax bracket, that is to say the 7% decrease provided to the middle class. Are nine million Canadians going to benefit from this?
General Director, Tax Policy Branch, Department of Finance
That is correct.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
In reference to a table in the federal budget, you mentioned that Canadian families are going to receive a net benefit of $14 billion through the tax reduction of the second bracket and the Canada Child Benefit. Could you go back to this table that deals with the net benefit to Canadian families?
General Director, Tax Policy Branch, Department of Finance
Are you talking about the $14 billion?
General Director, Tax Policy Branch, Department of Finance
That is the net amount. It includes what is given to families. The $14 billion is aimed at families with children. It does include the tax reduction for the middle class as well as the new Canada Child Benefit. It is net with regard to what we are taking out of the system, that is to say the income splitting for families with children and the credits for the children's activities.