INDEPTH: ECONOMIC & FISCAL UPDATE
Personal & Corporate Taxes
CBC News Online | November 14, 2005
With a federal election looming, Finance Minister Ralph Goodale used his latest economic update to offer Canadians personal and corporate tax cuts.
Goodale said the government will boost the basic personal amount Canadians can earn without paying federal income tax by $500, effective this tax year. The personal exemption would rise by an additional $200 at the start of 2006, adding up to $100 more than was planned in last February's federal budget.
The finance minister's plan will also cut the tax rate applied to the lowest tax bracket. For Canadians with incomes under $35,595, the tax rate will be lowered to 15 per cent from the current 16 per cent, again effective this tax year.
Goodale said his plan will save a two-income family of four making $60,000 a total of about $3,300 in taxes over the next five years.
Small tax relief for middle income earners
For the two middle tax brackets – 22 per cent on income between $35,595 and $71,190, and 26 per cent on income in the $71,190 to $115,739 bracket – the tax rate will be lowered by one percentage point effective Jan. 1, 2010.
For those in the highest income bracket, Ottawa plans to increase the income level at which the top tax rate will begin to apply from $115,739 to $200,000, with the change taking effect in 2010.
The government also hinted at the possibility of more personal income tax breaks if Ottawa runs any unanticipated surpluses.
Business tax cuts return
Goodale also used his economic update to reintroduce a series of corporate tax cuts that were included in his 2005 federal budget but later dropped as a condition of winning New Democratic Party support last spring.
The government is bringing back its plan to reduce the general corporate tax rate from the current 21 per cent to 19 per cent by 2010.
Goodale's plan also calls for the elimination of the 1.12-per-cent corporate surtax for all businesses by 2010.
"In today's more globally integrated economy, we need a tax system that also helps our companies to compete, invest, grow and create jobs," Goodale said in his prepared remarks for the economic update.
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