Canada's New Government Contributes to Early Arrival of Tax Freedom Day

June 26, 2007

Tax Freedom Day has arrived four days earlier this year due in part to the tax relief provided by Canada’s New Government. According to the Fraser Institute the reduction in the GST from 7 per cent to 6 per cent, the Child Tax Credit and changes to the spousal/dependent tax deduction were contributing factors. Over the past 16 months the government has provided relief in every way taxes are collected: excise taxes, personal taxes, consumption taxes and business taxes.

“Our government believes Canadians pay too much tax and deserve to keep more of their hard earned money,” said Jim Flaherty, Minister of Finance. “It’s certainly positive that Tax Freedom Day is here four days earlier than it was under the Liberals, but we can and must continue to lift the tax burden on hard working Canadians.”

Canada’s New Government is delivering nearly $41 billion in personal and corporate tax relief over this and the next two fiscal years. The government has reduced more than 55 federal taxes putting more money back into the pockets of individuals, families, workers and seniors.

“We are experiencing the second-longest period of economic expansion in Canadian history and our unemployment rate is the lowest in over 30 years, with more Canadians working than ever before,” said Minister Flaherty. “In order to make our strong economy even stronger we are actively working to create a tax advantage in Canada. The goal, as set out in our long-term economic plan Advantage Canada, is to reduce taxes for all Canadians and establishing the lowest tax rate on new business investment in the G7.”

Our tax relief plan includes:

For individuals and families:

• A reduction in the GST from 7% to 6%.
• A new $1,000 Canada Employment Credit
• A new $2,000 Child Tax Credit
• A new $550 million per year Working Income Tax Benefit (WITB) of up to $500 for individuals and $1,000 for families.
• A new 15.5% tax credit for the cost of monthly transit passes
• To provide increased support to Canadian seniors, this government has doubled
• the amount of eligible pension income that can be claimed under the pension income credit from $1,000 dollars to $2,000 starting in the 2006 tax year, the first increase in more than 30 years.
• Tax Fairness Plan, which delivers additional tax savings for Canadian seniors including increasing the age credit amount by $1,000 to $5,066 and pension income splitting.
• After paying down $13.2 billion on Canada’s national debt in September 2006 and further reducing the debt by $9.2 billion in Budget 2007, Canada’s New Government is providing Canadians with a Tax Back Guarantee where the interest savings on the debt repayment will be returned to Canadians in the form of personal income tax relief.
  

For Businesses:

• Effective January 1st, 2008, our Government will be reducing the general corporate tax rate to 18.5% by 2011.
• Increased the Lifetime Capital Gains Tax Exemption for small business to $750,000 from $500,000
• Reducing the tax compliance burden on small business by decreasing the frequency of their tax remittance and filing requirements.

For more information contact:

Chisholm Pothier
Office of the Minister of Finance
613-996-7861