May 4, 2015 / 6:49 PM / in 2 years

Canada's Trudeau vows to cut middle-class taxes, hike taxes on rich

GATINEAU, Quebec, May 4 (Reuters) - Canadian opposition Liberal leader Justin Trudeau pledged on Monday to cut taxes for most middle-class families and raise taxes on the rich, as he sought to regain his polling lead over the ruling Conservatives ahead of an October election.

Trudeau, son of former Prime Minister Pierre Trudeau, helped lift the Liberals into first place when he took over as leader in 2013, but the party has since slumped and has trailed Prime Minister Stephen Harper’s Conservatives in some recent polls.

The Conservatives have gained ground since last fall, when they announced tax cut and family benefit plans, and their April 21 budget has put pressure on Trudeau to counter with specific policies.

Trudeau said Harper - in power since early 2006 - was too focused on the wellbeing of the rich.

The Liberal leader said he would cut the federal tax on the middle class to 20.5 percent from 22 percent. At the same time, the federal tax bracket on income above C$200,000 ($165,300) would rise to 33 percent from 29 percent.

For years it has been considered politically taboo to raise personal income taxes, but Trudeau said it would only affect the top 1 percent.

“For the past 10 years Stephen Harper has ignored the people who do most of the heavy lifting in our economy, the people who work longer and longer hours for an ever shrinking piece of the pies,” Trudeau said an event in Gatineau, near Ottawa.

The tax hike and tax cut, each worth C$3 billion annually, are designed to be revenue neutral. Canadians are subject to both federal and provincial taxes; Ontario and Quebec taxpayers’ combined top marginal rate would now be almost 54 percent.

Trudeau, who says Harper’s tax measures unfairly benefit the rich, said he would boost child benefits by C$4 billion a year while phasing them out for wealthier Canadians.

The added cost would in part be covered by canceling a C$2 billion per year income-splitting measure the Conservatives introduced last year for parents with school-age children.

The other C$2 billion needed for the plan would come from the C$1.7 billion surplus the government has budgeted for 2016-17 and/or from reducing waste, he said.

The New Democratic Party, to the left of the Liberals, is in third place in the polls but has been catching up in recent months. It has proposed a C$15-a-day child care program.

$1=$1.21 Canadian Additional reporting by David Ljunggren; Editing by Leslie Adler

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