Earlier in the week, the Liberals came out with a promise to cut the lowest federal personal income tax rate from 15 per cent to 14 per cent and also cut the value of tax credits to match.
The Conservatives have the exact same plan except they’d drop it to 12.75 per cent (over two years), as well as exempting an additional $10,000 in seniors’ working income from taxation.
The NDP was the third party to join the frenzy. They’re promising to increase the basic personal exemption to $19,500. They’d also target cash transfers by doubling the Canada Disability Benefit to $4,800 and boosting the Guaranteed Income Supplement for low-income seniors. They’d pay for part of this by reinstating fairer taxation for capital gains, which was cancelled just before the election (of an inclusion rate of 66 per cent on capital gains over 250,000).
The Greens are in here too, promising to increase the personal exemption to $40,000, just like the NDP but to a much higher level.
There are more tax promises than just these, like the GST removal on new homes (Liberals and Conservatives) or the removal of GST on essential items (NDP), but included in this analysis are all of the changes that would go through the income tax system, whether it’s a tax cut or a cash transfer.
I’ve been putting the details of these promises through Statistics Canada’s tax modelling software to assess who will benefit—and who won’t.
NDP proposal benefits everyone except the richest 1 per cent
The NDP proposals provide roughly the same tax savings across all income groups—about $500, on average, per tax filer. The average benefits would be about twice as much for lower-income earners making between $14,000 and $31,000.
While the NDP plan claims that the richest 10 per cent would pay more, its’ actually only the richest one per cent, those making over $350,000, who would pay more. The top one per cent would pay, on average, $4,740 more per tax filer and the remainder of that richest decile would see a net benefit of, on average, $394. Why? Because of the NDP’s promise to increase the capital gains tax. Only the richest one per cent would benefit from lower taxes on their preferred income type, capital gains, and you have to make $250,000 in capital gains before the new rate even kicks in.
Conservative proposal hands largest benefit to the richest 30 per cent
The Conservative party proposal provides the largest benefit to the richest 30 per cent of income earners, who would reap about $700, on average, in tax savings. The Conservatives’ tax cut plan provides almost no savings to Canada’s lowest-income earners and their new tax exemption for seniors’ working income would have almost no impact on most seniors.
Liberal and Conservative proposals, and impact, are similar
The Liberals’ plan is identical to the Conservatives’, except the richest 30 per cent of Canadians would save about $300, on average. Low-income Canadians would get, essentially, nothing from these measures.
Green Party proposals a similar to the NDP, but benefit higher-income people
The Green Party of boosting the basic personal exemption is identical to the NDP proposal, except more of it. Despite spending over $60 billion on these measures, those making under $30,000 would see basically no benefit under the Green Party plan. But the second highest decile, those with incomes of $95,000 to $129,000, would see an average $3,500 in tax savings.
Here is the breakdown of each party’s tax and transfer promises so far, individually in the same income groupings: 10 equally sized groups of tax filers, sorted by pre-tax income (just hover over a bar to see its average benefit).
Press release fact check
A common theme among all party platforms is that the hypothetical maximums promised in party press releases drastically overstate what average tax filers will get. The Liberals and Conservatives touted benefits of $412 and $928 a person from their tax changes, but only one per cent of tax filers would get those maximums. Actual tax files are more complicated and result in lower average benefits.
Claims about low-income Canadians fact check
All parties claim their tax cuts will help low-income earners. Let’s fact check that claim.
Here, we can see the impact of each party’s tax and transfer plan on people living below the poverty line, using the Market Basket Measure (MBM). On this measure, the NDP’s plan would benefit Canada’s lowest-income tax filers the most, by far: Their average benefit would be $613 (largely due to promised changes in the Disability Benefit), compared to $123 for the Green Party’s plan.
The Liberal and Conservative plans would result in basically no average benefit for those living in poverty: $25 for the Conservative plan, and $11 for the Liberal plan.
Obviously, if a political party is willing to spend more, the result is that it would provide more benefits to Canadians. But by spending more, they might have less to spend in other areas, like blunting the impact of Trump’s tariff war.
Spending more obviously increases the deficit. These are all massive spending promises. In the CCPA’s 2025 Alternative Federal Budget, we put forward a program that would cost $6 billion and cut child poverty in half, which I thought was ambitious but would have a deep impact on Canadians.
The cheapest program would be the Liberal one, costing $5.4 billion in 2025. The Conservative package costs more than twice that, $12.2 billion. Despite raising money through the capital gains rate, the NDP measures would have a net cost of $17 billion a year, and the Greens blow the doors off with a cost of $61.3 billion. Hover over any program to find its individual cost.
Methodology
All simulations with Statistics Canada’s tax modelling software SPSD/M 30.3 for the 2025 tax year. Not all plans would be fully in place in 2025, but this standardizes the time frame. The Conservatives’ bottom bracket cut would be phased in over two years. The NDP revenues from the higher capital gains inclusion rate would be lower in 2025 than projected, due to many gains being crystalized in 2024, prior to the projected implementation. The Canada Disability Benefit is fully modelled using SPSD/M glass box from our analysis in the fall of 2024. The NDP’s improvement in the GIS wasn’t specific. I increased the basic amount for singles by $1,500, for couples by $1,000 and for widows by $1,000 to roughly arrive at their budgeted amount of $4 billion.
The values included here are only for the impact through federal taxes and transfers, although some measures would change provincial taxes as well, like the capital gains inclusion rate.
