Prime Minister Mark Carney signed an order on Wednesday to implement a tax cut for Canada’s middle class by July 1. The announcement came after the first meeting of the newly appointed cabinet.
Once this cut comes into effect, the lowest marginal personal income tax rate will be reduced from 15 per cent to 14 per cent. The Liberals say this measure will deliver over $27 billion in savings to Canadians over five years.
“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,” said François-Philippe Champagne, Minister of Finance and National Revenue “Every Canadian should be able to afford necessities, feel secure, and get ahead financially—and this tax cut will help them do just that.”
Affordability was a top-of-mind concern as candidates campaigned ahead of the April 28 federal election. Swift, urgent action to address this issue was a demand of many unions. However, this new measure from the Liberals is not without fault.
Before Mark Carney was elected Prime Minister, the non-profit organization Canadians for Tax Fairness was critical of his plans for middle-class tax cuts. Analysis written by the organization’s executive director Katrina Miller and researcher Silas Xuereb said only those who make more than $57,375 in taxable income will receive the full benefit. As well, they noted that Carney’s tax cuts do not include measures to make up the revenue by adjusting tax rates for those on the higher end of the income spectrum.
A lack of revenue could put health care and other public services at risk of cuts, Xuereb and Miller wrote. These cuts would come at a time when unions and workers’ organizations are calling for increased public services to support workers who are affected by tariffs imposed on Canadian goods by the U.S.
READ MORE: The workers’ agenda for the federal election
Mark Carney appointed 28 cabinet ministers and 10 secretaries of state on Tuesday. Labour issues will be handled by Patty Hadju, the new minister of Jobs and Families, alongside John Zerucelli who has been appointed secretary of state for labour.
Soon after the new cabinet was announced, Canada’s labour movement made their demands clear. Bea Bruske, president of the Canadian Labour Congress, said workers need the new cabinet to invest in public services and reform EI so no worker gets left behind.
“In this moment of economic uncertainty and mounting trade pressures from the United States, we need leadership that will meet the urgency of this moment with courage and ambition,” she said.
Bruske’s sentiment was echoed in calls from the Public Service Alliance of Canada (PSAC), the union representing the largest number of federal public servants. The union said a strong social safety net backed by well-funded public services will be a lifeline as Canadians navigate the uncertain times ahead.
“This is a pivotal moment for our new government as workers in Canada face a cost-of-living crisis and families grapple with the impact of tariffs on our jobs and economy,” said Sharon DeSousa, PSAC National President. “Protecting the public services people rely on has to be at the heart of everything we do, and cabinet has a vital role to play in strengthening our public service and supporting the workers who deliver them.”
While the labour movement has expressed readiness to collaborate with the new cabinet, a sense of wariness remains as well. The Canadian Union of Public Employees (CUPE), Canada’s largest public sector union, has bemoaned the change in the cabinet position for labour. Under the previous Liberal government, a cabinet minister was responsible for labour. Now, this file has been delegated to a secretary of state, which receives a smaller staffing budget than core cabinet ministers and does not attend all cabinet meetings.
“The Prime Minister’s decision to give labour concerns a second-class seat at the cabinet table shows that workers will matter even less than they did under the previous Liberal government,” CUPE wrote on their website. “In this pivotal moment for our country amidst threats to our sovereignty, workers should come first – not as an afterthought.”
Editor’s Note 2025-27-05: This article was updated to clarify that only those who make more than $57,375 in taxable income a year will receive the full benefit of Carney’s “middle-class” tax cut.
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