(Adds Conservative reaction, details on Liberal plans)
By Randall Palmer
GATINEAU, Quebec, May 4 (Reuters) - Canadian 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 governing Conservatives ahead of October’s election.
Trudeau, son of former Prime Minister Pierre Trudeau, helped lift the Liberals into first place in the polls 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, partly because of their views on security issues and partly in response to their own plans to cut taxes and increase family benefits. Their April 21 budget pressured 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. The tax 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.
Trudeau said the tax hike and tax cut are each worth C$3 billion annually. Canadians are subject to both federal and provincial taxes, and under his plan the top marginal rate in Ontario and Quebec would be almost 54 percent. In New Brunswick it would be 58.75 percent.
Trudeau said he would boost child benefits by C$4 billion a year and phase them out for wealthier Canadians.
The added cost would be covered in part by canceling a C$2 billion per year income-splitting measure introduced last year for parents with school-age children.
The other C$2 billion would come from the C$1.7 billion surplus budgeted for 2016-17, from revoking a near doubling of what can be put into tax-free savings accounts and from cost-saving moves.
Conservative cabinet minister Pierre Poilievre was quick to refer to the measures as the “Trudeau Tax”. He said Trudeau’s plan to shrink the tax-free savings allowance would hit the middle class disproportionately.
$1=$1.21 Canadian Reporting by Randall Palmer and David Ljunggren; Editing by Leslie Adler; and Peter Galloway