Matthew Lau: Federal tax policy will not be kind to Canadians in 2025
Federal tax policy was not kind to Canadians in 2024. That shouldn’t be a surprise: it wasn’t kind to Canadians in 2023 or 2022, either, or in any year since 2016, when the Trudeau government established a new income tax bracket of 33 per cent, with the result that today, the combined federal and provincial top tax rate is over 50 per cent in every province except Alberta (48.0 per cent) and Saskatchewan (47.5 per cent).
To recap tax policy changes in 2024, Ottawa began the year with its sixth consecutive Canada Pension Plan tax hike. In 2018, before the government’s CPP “enhancements,” a worker earning $85,000 faced a combined employer/employee CPP tax of $5,188. In 2024 the same worker’s tax bill was $8,111 — about 56 per cent higher, partly because of the government’s new “CPP2” tax.
Unfortunately, things will only get worse in 2025. The CPP tax bill for that same Canadian earning $85,000 will rise to $8,860, bringing the total tax increase from the government’s seven annual CPP “enhancements” to 71 per cent – the much higher tax bill resulting from both higher tax rates and the higher income thresholds to which the tax applies. “Enhancement” used to be such a nice word.
The federal government has also been increasing the carbon tax yearly. On April 1st it raised it from $65 to $80 per tonne. Like the CPP tax, the carbon tax will be going up again this year — to $95 a tonne.
Another big tax change in 2024 was the capital gains tax hike announced in June. The Trudeau government claimed it was increasing taxes only on “0.13 per cent of Canadians in any given year” — a statistic that’s both misleading and incomplete. First, 0.13 per cent of Canadians “in any given year” is mainly a different group than the 0.13 per cent
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