As we head into the Federal election, the parties are campaigning for your vote. A popular issue is always how much money they’ll put into your pocket.
Government grants, benefits, tax credits, reduced taxes, job creation, subsidies, and more directly impact how much money you have. Here’s how the party platforms compare when it comes to your personal finance:
Liberal Party of Canada | Conservative Party of Canada | |
|---|---|---|
| Canada Child Benefit | Increase CCB by 15% for children under age 1 (potential benefit $995 per child) | None |
| Maternity and parental leave benefits | Tax-free when disbursed | Parents receive a 15% tax credit following year |
| Universal pharmacare | Committed $35 million to Canadian Drug Agency, a first step towards universal pharmacare | None |
| First Time Home Buyers | Introduced the First-Time Home Buyer Incentive, a shared equity mortgage with the government that provides up to 10% of a home's value as a down payment | Remove the mortgage stress test Increase maximum term to 30 years (you will pay an 25% more interest on your mortgage) |
| Affordable housing | Impose a 1% tax on absentee foreign owners | Home heating costs exempt from GST (approximate savings $180) |
| Green Homes | up to $40,000 interest-free loan with a 10 year term to retrofit your house or apartment for energy efficiency (approximate savings $18,000 in interest that would otherwise be paid on a 10 year loan @ 8%) | Green homes tax-credit for energy efficient renovations (approximate savings $2,800) |
| Carbon Tax | Carbon tax on individuals living in a province with no provincial carbon tax. Most individuals will receive a rebate greater than the amount they pay. (approximate rebate $250 to $600 per year) | No federal carbon tax. Will leave it up to provinces to decide if they want to impose a carbon tax. |
| Tax Cut | First $15,000 of income earned is tax-free (approximate savings $300 per year) | Reduce taxes from 15% to 13.75% on taxable income under $47,630 (approximate savings $400 per year) |
| Canada Student Grant | Increase number of students eligible | Increase number of students eligible |
| Cellphone bills | Reduce by 25% within 2 years (approximate savings $1,000 per year) | None |
| Student Loans | Interest free for the first 2 years after you graduate No payments if your income is less than $35,000 per year No payments & no interest for new parents, until their youngest child turns 5 | None |
The Conservative Party of Canada campaign promises will have an impact on your money. But by how much? Here’s a detailed breakdown of how the tax cuts and credits will affect your bank account!
Don’t forget to check out the other posts in this series:
- How the Liberal Party of Canada Campaign Promises will affect your finances
- How the New Democratic Party of Canada Campaign Promises will affect your finances
Implement the Universal Tax Cut
The Conservatives have promised a “universal tax cut,” cutting the tax rate on taxable income under $47,630 from 15% to 13.75%.
Because The Universal Tax Cut targets the lowest tax bracket, it will benefit anyone who pays income taxes. It’s expected to put more money in the pockets of roughly 3 out of 4 Canadian families. This would have a single earner bringing in $47,000 per year save about $426. A working couple with average incomes would save about $850.
The irony is the Universal Tax Cut will actually reduce the impact of other tax credits proposed by the Conservative Party for everybody. Tax credits only work if you pay taxes. If everyone’s taxes are effectively lowered, the impact goes down.
Furthermore, because tax cuts and tax credits only benefit households that are paying taxes, they don’t do anything for the most vulnerable populations that are earning little to no income. These include students, seniors, lone-parent households, and the unemployed. However, it also includes low- to mid-earning families that may already qualify for tax credits because they have children, high medical costs, or other tax-deductible expenses.
Bring back boutique tax credits
The Conservative party has promised to revive some niche tax credits that the Liberal government did away with when they came into power.
Tax credits are always an attractive election grab because most voters stand to gain from them. However, I cannot emphasize enough that tax credits disproportionately serve people who pay the highest taxes: the wealthy (aka. probably not you).
Andrew Scheer has said these will be refundable tax credits, which means even low income families that pay little or no income taxes can still benefit. But only if they spend the money first, which they probably didn’t because they are low income.
Green Public Transit Tax Credit
The proposed Green Public Transit Tax Credit is a 15% credit that would apply to the costs of weekly and monthly transit passes and frequently used electronic fare cards.
The idea behind this is less about saving families money, and more about reducing vehicle emissions by encouraging people to take public transit. However, tax credits like this have been found to increase public transit ridership by only about 0.25%, a virtually negligible amount. This is probably because no one is driving because it’s cheaper.
We all know riding the train or bus is more affordable. Adding tax credits to make it even more affordable won’t make any difference.
Child Fitness & Arts Tax Credit
Andrew Scheer has promised families they will be able to claim up to $1,000 per child for expenses related to fitness or sports-related activities and up to $500 per child for expenses related to arts and educational activities. Parents of children with disabilities to claim an additional $500 per child per year.
Obviously, only families who can afford to enroll their children in extra-curricular activities in the first place will be able to claim this tax credit. Once again, vulnerable families with little disposable income who can’t afford to put their kids in sports or arts activities won’t be able to claim this tax credit.
Green homes tax credit
The Conservatives have proposed a tax credit for energy-saving home renovations. Homeowners will be eligible for up to $2,850 each year for improvements like insulation, high-efficiency furnaces, new doors and windows, and solar panels.
If you’re at all aware of how much installing solar panels cost, a $2,850 tax credit is not a particularly generous offer. Maybe just buy a couple of good doors?
Implement a tax credit for maternity and parental benefits
Both the Liberal and Conservative parties are offering to make maternity and parental benefits tax-free. This is an especially popular campaign promise because many new parents are surprised by the tax bill on the Employment Insurance (EI) benefits they receive during maternity or parental leave.
The Government of Canada currently provides up to up to 18 months of paid parental leave to new parents. While the program has flaws, it’s one of the most generous parental leave programs in the developed world. Mothers are entitled to 15 weeks of paid maternity leave at a maximum of $562 per week. Parents can then choose to receive up to a maximum of $562 per week for 12 months, or $337 per week for approximately 16 months.
Under Scheer’s plan, families will receive a 15% non-refundable tax credit on their parental EI benefits. This is roughly equal to the federal tax on these benefits. Families will still need to pay provincial income tax on this income.
It’s worth noting that the Conservative promise is a 15% tax credit, which means you won’t receive the benefit until the following year when you file your taxes. This is much different than the Liberal promise to disburse parental benefits without any income taxes, so families receive more money right away.
Liberal Party of Canada | Conservative Party of Canada | |
|---|---|---|
| Canada Child Benefit | Increase CCB by 15% for children under age 1 (potential benefit $995 per child) | None |
| Maternity and parental leave benefits | Tax-free when disbursed | Parents receive a 15% tax credit following year |
| Universal pharmacare | Committed $35 million to Canadian Drug Agency, a first step towards universal pharmacare | None |
| First Time Home Buyers | Introduced the First-Time Home Buyer Incentive, a shared equity mortgage with the government that provides up to 10% of a home's value as a down payment | Remove the mortgage stress test Increase maximum term to 30 years (you will pay an 25% more interest on your mortgage) |
| Affordable housing | Impose a 1% tax on absentee foreign owners | Home heating costs exempt from GST (approximate savings $180) |
| Green Homes | up to $40,000 interest-free loan with a 10 year term to retrofit your house or apartment for energy efficiency (approximate savings $18,000 in interest that would otherwise be paid on a 10 year loan @ 8%) | Green homes tax-credit for energy efficient renovations (approximate savings $2,800) |
| Carbon Tax | Carbon tax on individuals living in a province with no provincial carbon tax. Most individuals will receive a rebate greater than the amount they pay. (approximate rebate $250 to $600 per year) | No federal carbon tax. Will leave it up to provinces to decide if they want to impose a carbon tax. |
| Tax Cut | First $15,000 of income earned is tax-free (approximate savings $300 per year) | Reduce taxes from 15% to 13.75% on taxable income under $47,630 (approximate savings $400 per year) |
| Canada Student Grant | Increase number of students eligible | Increase number of students eligible |
| Cellphone bills | Reduce by 25% within 2 years (approximate savings $1,000 per year) | None |
| Student Loans | Interest free for the first 2 years after you graduate No payments if your income is less than $35,000 per year No payments & no interest for new parents, until their youngest child turns 5 | None |
Increase the government CESG match on RESP savings
The Government of Canada currently provides the Canada Education Savings Grant (CESG). The CESG matches contributions to a child’s Registered Education Savings Plan (RESP) by 20%, to a maximum of $500 per year. The CESG has a lifetime maximum of $7,200. This is free, non-taxable money that helps parents save for the cost of their child’s post-secondary education.
RELATED POSTS
The UCP has promised to increase the CESG from a 20% match to 30%, increasing it from $500 to $750 per year. They also promise to lift the lifetime maximum from $7,200 to $12,000.
While this might seem like a generous offer at first glance, Increasing the CESG only benefits families that can afford to save the maximum qualifying amount in an RESP in the first place. A family with two children will need to be setting aside $5,000 per year in their child’s RESPs in order to receive the maximum CESG.
And to state the obvious here, this campaign promise neglects the actual problem: expensive post-secondary education. I don’t want more government money to pay for inflated university costs. I’d much rather see a plan to freeze, reduce, or eliminate post-secondary tuition bills entirely.
Maintain the Canada Child Benefit (CCB)
The Canada Child Benefit is a monthly income-dependent tax-free disbursement from the Government of Canada to families with children to help with child-rearing costs. Families can receive up to $6,639 per child under the age of 6, and up to $5,602 per child aged 6 to 17.
More than 4 out of 5 Canadian families receive the CCB. While there is a clawback as household incomes increase, most families earning less than $188,000 receive some money. They can use this money however they want, from childcare costs to RESP contributions to living costs.
RELATED POSTS
The current Canada Child Benefit was a Liberal Party creation. It’s one of their most successful actions and has lifted more than 300,000 children out of poverty. There’d be outright mutiny if the Conservatives tried to scale it back. However, they’re not increasing it either (the Liberal party is).
Increase the number of students eligible for the Canada Student Grant
The Canada Student Grant provides up to $3,000 per year to low-income undergraduate students to help with the expenses of attending post-secondary. When you apply for student loans, you are automatically assessed for this grant, and it is disbursed with your student loans. However, because it is a grant and not a loan, it does not have to be paid back.
The Conservative Party of Canada has made the same promise as the Liberal Party of Canada: to increase the number of students eligible for the Canada Student Grant. While this is great, the Tories have no plan to address tuition or student debt, which is the real problem.
Review the mortgage stress test and introduce 30-year terms
We’re trying to be non-partisan and only point out the math in this article, but this is quite possibly the dumbest campaign platform to be introduced by any party leader. Andrew Scheer has promised to review the mortgage stress test and introduce 30-year mortgage terms.
The mortgage stress test was introduced in 2018 to help cool the housing market and help Canadians enjoy more financial security in homeownership. It requires home buyers to qualify for a mortgage at two-points higher than current interest rates. Passing the mortgage stress test ensures you will still be able to afford your mortgage payments, even as interest rates continue to rise.
The current maximum mortgage term in Canada is 25 years. The Conservative Party’s idea to increase it to 30 years will lower the monthly mortgage payment. This combined with the removal of the mortgage stress test will make it easier for Canadians to qualify for mortgages. The New Democratic Party of Canada has made the same promise to bring back 30-year mortgage terms.
The problem with these initiatives is obvious: it will continue to inflate Canada’s already overheated housing market. When we make it easier for people to buy homes, more people buy homes, and house prices continue to rise. Furthermore, longer mortgage terms with no interest rate protection are dangerous for homeowner’s financial security.
Even Conservative-voting personal finance leaders hate this idea.
No GST on Home Heating Costs
How much it costs to keep warm through Canada’s cold winters depends on where you live. In some provinces, home energy costs are a huge strain on family budgets. The Conservative promise of no GST on home heating costs would save families $50 per $1,000 spent on heat.
The average Canadian spends about $300 per month on heating costs or $3,600 per year. No GST on this expense would save them about $180 annually.
Repeal the Carbon Tax
The Carbon Tax has been a contentious issue because Boomers are in denial the world is burning and unfortunately Boomers are still in charge of things.
Andrew Scheer has promised to repeal the carbon tax, which would reduce utility and fuel costs for Canadians. He says he doesn’t think carbon tax has a direct effect on emissions, even though actual data indicates otherwise. While this is a cornerstone of the Conservative Party of Canada’s campaign platform, it’s unlikely they’ll be able to repeal the Carbon Tax unless they get a majority government.
Final thoughts
When it comes to how the Conservative platform will impact your finances, the result is par for the course for this party: the highest-income households will benefit the most, while lower-income, more vulnerable populations will benefit the least.
When someone is waving a $100 bill in front of your face, it’s distracting enough you might not notice someone else is getting $300 for the same thing, and the person who needs help the most is getting $0. With most families fretting over their own budgets, it’s hard to imagine people who are struggling even more than you are. However, one of the best things we can as Canadians is lookout for the best interests of every citizen, not just a few extra dollars in our own pockets.
Don’t forget to check out the other posts in this series:
1 Comment. Leave new
Thanks so much for writing this! In my opinion, these things need to be talked about more, not hushed and taboo *insert eye roll*.
I do hope to see summaries of the NDP and Green parties as well! Will you do that for us? Thanks!