Liberal Government Tables Motion to Cut Income Taxes, Eliminate GST on New Homes

The Liberal government has tabled a motion to provide an income tax cut and eliminate the GST on new homes up to $1 million for first-time home buyers.

Finance Minister François-Philippe Champagne tabled the ways and means motion in Parliament on May 27 following the speech from the throne earlier in the day. The plan is to reduce the lowest marginal personal income tax rate from 15 percent to 14 percent, effective July 1. 

The government said the tax cut will be applied to the first  $57,375 of an individual’s income, regardless of the person’s overall income.

The government says the tax cut would save a two-income family up to $840 a year beginning in 2026. Ottawa added that those in the two lowest tax brackets would see a larger share of the tax relief.

“With today’s middle class tax cut, we are setting the stage for economic growth by helping hard-working Canadians keep more of their paycheques to spend on the priorities that matter most to them,” Champagne said in a release on the measures.

“Every Canadian should be able to afford necessities, feel secure, and get ahead financially—and this tax cut will help them do just that.”

First-time home buyers would benefit from the elimination of the GST on new homes valued up to $1 million and reduced GST on new homes between $1 million and $1.5 million.

The Liberal government estimates the income tax cut will cost the government $27 billion in revenue while the housing tax measures will cost $3.9 billion over five years.

The motion would also remove the consumer carbon tax from legislation. It follows a March 14 directive from Prime Minister Mark Carney signalling his government’s plan to reduce the tax rate to zero starting April 1.

During the election campaign, the Liberals and Conservatives made similar promises to cut taxes and remove the GST on homes. The Tories promised to remove the GST on homes up to $1.3 million, while the Liberals’ measure applied to homes up to $1 million.

On March 23, Carney promised a 1 percentage point tax reduction for those in the lowest income tax bracket. Conservative Leader Pierre Poilievre committed the next day to cut income taxes by 2.25 percentage points.

While both parties agreed on removing the consumer carbon tax, the Conservatives also called for the industrial carbon tax to be removed. Carney has proposed a system that rewards Canadians for making lower-emission choices and makes “big polluters” in industry pay.

Poilievre said on May 28 that the Conservatives favour tax cuts and will support legislation to implement them.

“The question we always ask is, ‘Is the proposal better than the status quo?’ If it is, then we support it. If it’s not, then we oppose it,” he said.

He called on the government to remove the industrial carbon tax and provide steeper tax cuts, saying the proposed GST cut on new homes doesn’t go far enough.

The Conservatives plan to introduce amendments to the government’s ways and means motion aimed at reducing spending by cutting “bureaucracy, consultants, corporate welfare, and foreign aid,” Poilievre said.