Ottawa eyes income splitting for all Canadians: Flaherty
The Conservative government is consideringallowing Canadian couples to split their incomes to reduce theirfamily's overall taxes,Finance Minister Jim Flaherty confirmed Tuesday.
Flaherty saidThursday's economic statement will spell out tax cuts the Harper government wants to implement in the 2007 budget and subsequent budgets.
Those cuts could includelowering income taxes, capital gains taxes, and cutting the GST by another percentage point.
He hinted that itmay include extendingthe income splitting move he announced last monthfor senior couples toall other couples.
"That's a possibility. I wouldn't put it any higher than that â¦ It's one of the issues we'll look at as we prepare for the 2007 budget," Flaherty toldjournalists on Tuesday.
Full income splitting could cost Ottawa up to$5 billion a year in lost tax revenues, according to some estimates.
Under current tax policy, Canadians file taxes as individuals, not as a couple. The ideaof income splitting is toreduce afamily's tax burden by allowing couples to pool their incomes — something that would shiftincome from the higher income earner in a coupleto the lower earner, resulting in lower overall taxes.
In late October, Flahertysaida move toallow widerincome splitting"is worthy of study and we are reviewing it."
The government announcedpension income splitting for seniors on Oct. 31, the same day it brought in new taxes on income trusts.
With files from Canadian Press