Wednesday, October 31, 2007

Canadian Finance Minister Jim Flaherty announced a five-year program that could reduce taxes by a total C$60 billion.

The planned tax reduction measures include:

  • Low-end personal income tax rates would be reduced from 15.5% to 15%, taking retroactive effect to the start of 2007;
  • The basic personal exemption, the amount at which income is taxable, is raised from C$8,929 to C$9,600, also backdated to January 2007;
  • Business tax rates are expected regularly drop from the current 20.5% to 15% in 2012;
  • The Goods and Services Tax that applies to most purchases would be reduced from 6% to 5% as 2008 begins. This rate was previously reduced from 7% July 2006, shortly after Prime Minister Stephen Harper took office.

These measures will be brought before the House of Commons in Ottawa on Wednesday as a confidence motion. In Canada’s minority government situation, opposition parties could defeat these measures and likely prompt an election. However, opposition leader St├ęphane Dion has expressed an unwillingness to defeat the government on this matter.