With the coming Federal Election, there are a few buzz words going around. One of these buzz words is the Liberal party plan to introduce a carbon tax and have dubbed the plan The Green Shift. This platform has caught my attention in particular because it would provide environment reform in Canada (much needed) along with the potential for a few extra dollars in the tax payer pocket.
What is The Green Shift?
The Green Shift Plan is to introduce additional tax on companies that produce pollution and shift this money to to taxpayers. This plan is meant to be revenue neutral meaning that it’s not a government tax grab.
To be more specific, the Liberals plan on putting a price on Greenhouse emissions at the rate of $10 per tonne for the first year, rising $10 each year until it reaches $40 per tonne. They also claim that government taxes at the pumps will not rise but other fuels will see some increases after the first year.
What Does this Mean to the Tax Payer?
- Lowest tax rate will be reduced from 15% to 13.5%.
- Middle class tax rates reduced from 22% to 21% and 26% to 25%.
- New universal child tax benefit worth $350/child/year in addition to existing child benefits (what about the existing $1200/child/year UCCB?).
- Workers making less than $50k/year will receive an extra $250 in tax refunds.
- Enhanced Working Income Tax Benefit for low income workers.
- The Disability Tax Credit will be refundable.
- Lowered corporate and small business rates by 1%.
- Tax credits for development of green technologies.
- Increase to the Guaranteed Income Supplement (GIS) by $600/year by year 4.
- New Guaranteed Family Supplement which will provide a maximum of $1,225 / year for families with children under 18. This will be in addition to the Child Tax Benefit.
The Not So Good
- Homes that are on heating oil will see increases of up to $16.95/month or $203/year by year 4.
- Homes using natural gas will see increases of up to $22.16/month or $266/year by year 4.
- Bad news for truckers, by year 4, diesel costs will increase by $1,700/year.
Real World Tax Savings
Below is a table pulled from The Green Shift handbook which details how much tax savings that you can expect based on your marital/child status. It seems that a couple with 1 child can expect at least $1,000/year in savings by year 4 of the Liberal plan. You can also do a specific calculation on their website with their nifty calculator.
Click on the image below to view the full size.
Personally, I think the Liberals have a decent idea here as Canada is behind in the green times. Not only is this plan environmentally motivated (debatable), it will provide tax cuts for all Canadians. On the other hand, if the Liberals get elected, watch for our Oil companies to pull back which means the the TSX index will be pulled with it.
What do you guys think of The Green Shift plan?
Disclaimer: This post does not represent my political views.If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).