Flaherty offers GST, cuts Gloria Galloway October 30, 2007 –

The Conservative government, apparently • The basic personal income-tax exemption swimming in more cash than even the most will increase to $9,600 from the current optimistic economist had predicted, will fulfill $8,929, retroactive to 2007. And it will a campaign promise to cut the GST and increase again to $10,100 as of Jan. 1, 2009. introduce income tax cuts that will be felt • The government is reducing the lowest when Canadians file their taxes for the current personal income-tax rate to 15 per cent from year. 15.5 per cent, a retroactive change that will The multi-billion dollar package of tax relief also be felt at tax-time this coming year. announced Tuesday by Finance Minister Jim • There will be a cut to corporate taxes of 1 Flaherty is intended to per cent in 2008 with on- appeal to voters as Highlights of economic update tabled by going reductions that will Parliament prepares for a Finance Minister : see business taxes fall potential spring election. • GST cut one percentage point to five per down to 15 per cent by Even after the tax cuts, cent, effective Jan. 1, 2008. • Personal income tax cut retroactive to 2012 from 22 per cent which will amount to today. That will leave more than $10-billion in Jan. 1, 2007, cutting lowest marginal tax rate to 15 per cent from 15.5 per cent. with one of the the current fiscal year, • Jump in basic personal exemption to lowest corporate tax rates there will be a projected $9,600, retroactive to Jan. 1, 2007, among the industrialized surplus of $11.6-billion. increasing to $10,100 in 2009. • $10-billion in federal debt relief. economies. “We haven’t seen taxes • One percentage point cut in corporate tax • The government will this low since Lester B. to 20 per cent in 2008. still have $10-billion in • Reduction in corporate tax rate to 15 per Pearson was prime surplus cash to apply to minister,” Mr. Flaherty cent by 2012. • Small business income tax reduced to 11 the national debt. bragged in the opening per cent by 2008. lines of his mid-term • Total tax relief estimated at $60-billion Mr. Flaherty said his new economic statement. over five years. personal income-tax measures will remove an “Canada has emerged as a additional 380,000 low-income Canadians shining example in an economic universe of from the tax rolls altogether. rapid change and uncertainty. We are leading the way with our tax cuts, our debt reduction “By reducing the GST, our government has and our focused and responsible spending.” fulfilled a key campaign commitment and kept its word to Canadians,” said Mr. Flaherty. Among the highlights: Bloc Québécois Leader Gilles Duceppe was • The Goods and Services Tax will be cut an quick to reject the mini budget, saying his additional 1 per cent as of Jan. 1, leaving the MPs will vote against it Wednesday afternoon. federal consumption tax at 5 per cent. The NDP Leader also said he couldn’t GST cut will cost the government about $5.5- support Mr. Flaherty’s update because it failed billion. But the GST credit for low-income to take the balanced approach of targeted tax Canadians will remain at its current level, said relief. Mr. Flaherty. That left the ball firmly in the court of Liberal budget. The second instalment was promised Leader Stéphane Dion, who put questions of a before 2011. snap election to rest late Tuesday. Mr. Dion is not alone in his objection to the “We will choose our time when we decide to GST cut. A group of 20 economists surveyed put this government down,” he said. “It will last week by The Globe and Mail were not be tomorrow.” unanimous in their rejection of the Conservative plan as a tax-cutting priority for The mini budget was intended as a poison pill Canada. for Mr. Dion, who objects to the GST cut on grounds that it is poor fiscal policy, but has All 20 economists said other tax cuts would be said previously that he won’t bring down the better for the country. government over it. The Liberals brought in “It doesn’t do anything to improve the their own income-tax cuts in the dying days of performance of the economy,” Toronto the government but those were Dominion chief economist Don Drummond reduced when the Conservatives came to said earlier Tuesday on CBC. office. “The only way I can benefit from a cut (to) the “We are back where we were in 2005 about GST is if I consume more. But we’re already the income tax. The government increased consuming an awful lot. We have a very low your income tax,” said Mr. Dion, adding that savings rate. On the other hand, if we look at he supports the corporate tax cut. our personal income tax system, for a lot of But he was unequivocal about the GST. families, they get to keep less than half of the last dollar that they earn.” “It’s a mistake. It will not help the productivity of our country, it will not help our Mr. Flaherty’s economic statement comes on families as it should. It’s a big mistake,” Mr. the eve of Halloween and the one-year Dion said. anniversary of the government’s controversial income trust tax, when the Tories broke an During the 2006 election campaign, Stephen election pledge to protect trusts. He made the Harper made a two percentage point cut to statement at the National Press Theatre the-then seven per cent GST the top item of because the NDP blocked unanimous consent his five-point agenda. The rate was dropped to to allow the update to be delivered in the six per cent during the Conservative’s first Commons.