Liberals Table Legislation to Cut Tax on Income, New Homes

Finance Minister François-Philippe Champagne speaks to the media prior to the G7 finance ministers meeting in Banff, Alta., on May 20, 2025. The Canadian Press/Jeff McIntosh

The Liberal government has tabled legislation to move ahead with its promised tax cuts on income and the sale of new homes.

The Liberal Party promised during the election campaign to reduce the tax rate from 15 percent to 14 percent for the lowest income bracket.

Bill C-4, introduced on June 5, aims to lower the personal income tax rate by 0.5 percentage points in 2025, given half a year has already passed. The rate will then fall to 14 percent in 2026.

The Liberals had also promised to remove the GST on homes for some first-time home buyers. The bill applies to homes costing $1 million or less, leading to savings of up to $50,000. The bill says the measure would be “temporary.”

The legislation would also remove the consumer carbon tax, or federal fuel charge, from legislation. Prime Minister Mark Carney had made this pledge during the Liberal leadership campaign and had set the fuel charge rate to zero immediately after being sworn-in in mid-March.

Bill C-4 follows the passing of a ways and means motion tabled by Finance Minister François-Philippe Champagne on May 27 to reduce the lowest income tax rate, get rid of the GST on new homes under $1 million, and scrap the consumer carbon tax.

Second Reading of Bill

Champagne said during second reading of the legislation in the House of Commons on June 6 that Bill C-4 will provide the “change” Canadians requested.

“They want us to bring down the cost of life, because the cost of living has made their quality of life deteriorate these past years,” Champagne said. “We want a plan for change to build the strongest economy in the G7.”

Champagne said Canadians are also facing a housing crisis, adding that the removal of the GST signalled the federal government is getting “back into the business of building homes.”

The finance minister also said the removal of the consumer carbon tax from law was the “first step in our government’s plan to ensure that Canadians can keep more of their hard-earned money.”

Conservative MP Kelly McCauley said the income tax cut in Bill C-4 amounted to “barely $1.50 a day,” but the $26 billion the party had given to “high-priced consultants” in the latest main estimates could work out to a total of $1,400 in savings per household each year.

In the lead-up to the last election, the Conservative Party promised a 2.25 percent income tax reduction for Canadians, while also cutting back on consultants to save $23.5 billion over four years.

Conservative MP Rob Moore said the Liberal government had “turned themselves completely inside out” by changing their stance on the consumer carbon tax.

“Every Canadian knows when they fill up at the pump, if they’re not paying the carbon tax today, it’s thanks to Pierre Poilievre and the Conservative team who rallied against it,” he said.