Finance Minister Bill Morneau conceded for the first time Monday that his government’s promised tax breaks for the middle class won’t be revenue-neutral and will actually cost the federal treasury $1.2 billion annually.

Morneau announced Monday that the Liberal government has introduced a motion in Parliament lowering the income-tax rate on Canadians earning between $45,282 and $90,563 per year to 20.5 per cent from 22 per cent. To make up for that tax break, the Liberals will raise the income tax rate for those earning more than $200,000 to 33 per cent from 29 per cent.

Originally touted as revenue-neutral, the tax changes – which take effect Jan. 1 -- will actually cost the government about $1.2 billion a year, numbers released Monday show.

“What we’re committing to do is make sure that Canadians can understand the numbers,” Morneau told CTV’s Power Play after explaining the tax rate changes at a news conference. “And you’re right – it’s not revenue-neutral.”

“Yes, there is a gap and we’re going to work towards making sure that we deal with that as well as many other things in the course of our mandate,” he said.

Morneau said the middle class tax cut is just the first part of the new government’s tax program. The Liberals have also promised a new Canada Child Benefit, as well as changes to EI premiums and some RRSP rules.

The Liberals are also bringing the annual tax-free savings account limit back to $5,500, after the Conservatives increased it to $10,000.

Morneau told Power Play that the Liberals’ initial estimates for the cost of their economic platform were based on what they thought were “appropriate projections” at the time.

He said they’ve had to “fine-tune” those estimates, and Canadians will have a “much better sense” of those numbers and the bigger fiscal picture once the 2016 budget is released.

Last week, Morneau dodged questions about the Liberal pledge to keep annual deficits under $10 billion in 2016-17 and 2017-18. Asked about it again on Monday, he said the government has been “dealt a deck of cards that’s a little different than what we expected.”

Between a “challenging” global economy and falling oil prices, Morneau said the government has a lot of work ahead. But he said the Liberals intend to deliver on their campaign promises and balance the budget “over the course” of their mandate.

With files from The Canadian Press