Madam Speaker, it is a pleasure to add my voice to today's discussion on the government's middle-income tax cut, which we introduced in December 2015.
Before I touch on the legislation, I will begin by taking a few moments to extend my congratulations to the Minister of Finance and his parliamentary secretary for pursuing one of the most comprehensive pre-budget consultations in recent history.
The 2016 pre-budget consultations began when the Minister of Finance held a Google hangout with eight Canadian universities on January 6 to get the views of students and faculty on how to best grow the economy. On January 11, the minister and his parliamentary secretary struck out on a six-day tour in an effort to speak to as many Canadians as possible. They hosted upwards of 26 separate meetings and round tables with stakeholders and Canadians across the country, beginning in Halifax.
In addition to these meetings, the minister spoke to full-capacity crowds at the Halifax Chamber of Commerce, the Montreal Council on Foreign Relations, and the Surrey Board of Trade, with a total attendance of well over 1,500 people.
For those Canadians who have not been able to make it out to meet the minister and the parliamentary secretary personally, they can continue to share their ideas and comments through various online channels, such as the Your Money Matters Facebook page and hashtag #pbc16.
Through our pre-budget consultations, we are engaging with Canadians, looking for input on how the federal government can best support the middle class and those working hard to join it, meet infrastructure needs and help grow the economy, protect the environment and meet local needs, as well as ensure that the most vulnerable do not get left behind. It is an ambitious list, to say the least, but one that respects Canadian values of honesty, hard work, and fiscal prudence.
I would like to thank all those who have and will contribute to the pre-budget consultations, whether in person or online. This input will be vital to ensuring that Canadians can direct and focus the decisions that our federal government can make. More importantly, Canadians will be able to see their contributions when the 2016 budget is tabled.
I want to assure Canadians that we are listening and we hope that this renewed interest by Canadians will make a better country for all of us; for our families and for our communities. We are hearing that Canadians want to push forward with our plan to grow the economy, strengthen the middle class, and help the vulnerable.
We have a clear mandate, and expectations are high. First and foremost, we are here to serve Canadians. They expect us to implement our ambitious economic agenda. They want a government that is open to the world. They want a more transparent government.
No one will be surprised to hear me say that the economy is going through a very difficult period. However, in the face of this real challenge, there is also real opportunity to put in place the conditions to create long-term growth that will create good jobs and help our middle class—the lifeblood of our economy—prosper. The plan for growth is more important now than ever.
The good news is that we have a plan to grow the economy, and we have already begun to implement the plan: we introduced the middle-class tax cut in December and tabled Bill C-2.
As of January 1, the middle-class tax cut is putting more money in the pockets of nine million Canadians each year. We are focused on smart investments that promote economic growth while maintaining a commitment to fiscal responsibility. We will improve economic prospects for our middle class, which is the backbone of our economy. We simply cannot call ourselves prosperous as a country if our middle class is struggling. This is why Bill C-2 is so important to Canadians.
I will now touch on the specifics.
Our middle-class tax cut and accompanying proposals would help make the tax system fairer by reducing the second personal income tax rate to 20.5% from 22%; introducing a 33% personal income tax rate on individual taxable income in excess of $200,000; returning the tax-free savings account, TFSA, annual contribution to $5,500 from $10,000; and reinstating indexation of the TFSA annual contribution limit.
We expect nine million Canadians will benefit from the reduction of the personal income tax rates, which are to take effect on January 1 of this year. Single individuals would see an annual tax reduction of $330 per year, and couples would see an average tax reduction of $540 every year. This measure would put more money in the pockets of Canadians to save, to invest, and to grow the economy.
In addition, the government is introducing a new personal income tax rate of 33% that would apply to individual taxable income in excess of $200,000. This means that only Canada's top income earners are expected to pay more tax as a result of the government's proposed changes to personal income tax. As with other bracket thresholds, the $200,000 threshold would be indexed to inflation.
Finally, the government is returning the tax-free savings account annual contribution limit to $5,500 from $10,000 effective January 1 of this year. Returning the TFSA annual contribution to $5,500 is consistent with the government's objective of making the tax system fairer and helping those who need it most. When combined with other registered savings plans, a $5,500 TFSA annual contribution limit would permit most individuals to meet their ongoing savings needs in a tax-effective manner. Indexation of a TFSA annual contribution limit would be reinstated so that the annual limit maintains real value over time.
Finally, let me quickly review some of the other measures that are included in today's legislation.
The bill proposes to change the current flat top taxation rules applicable to trusts to use the new 33% tax rate. It proposes to set the tax on split income to the new rate of 33%. It would amend the charitable donation tax credit to allow higher income donors to claim a 33% tax credit on the portion of donations made from income that is subject to the new 33% marginal tax rate. Finally, the bill would increase the special refundable tax and the related refund rate imposed on the investment income of private corporations to reflect the proposed new 33% personal income tax rate.
There has never been a better time to make targeted investments to support economic growth in this country. We are confident that our plan will accomplish this, and that is one reason why I am optimistic about our prospects going forward. Given that, I encourage all members to support this legislation.