Almost exactly one year after finance minister Jim Flaherty played Freddy Kruger and slashed the income trust sector to shreds, he is playing Santa Claus this Halloween and announcing a number of personal tax measures in the Fall fiscal update:
- The Goods and Services (GST) tax will drop a further 1% to 5%, effective January 1, 2008.
- The lowest personal tax rate will fall by 0.5% to 15%, retroactive to January 1, 2007.
- The personal exemption limit is raised to $9,600 for 2007 (from $8,929) and 2008 and $10,100 for 2009.
There are also significant corporate tax cuts in the fiscal update and accelerate the cut in the small business tax rate. The two retroactive cuts to personal taxes will save an average taxpayer about $200 per year and we’ll be paying a penny less for our double-double at our local Tim’s in the New Year.
Other Reaction to the Tax Cuts:
- Jonathan Chevreau in the Wealthy Boomer Blog points out that the reduction in the tax rate merely takes us back to where the lowest level was when the previous government cut taxes in its fiscal update.
- The Star calls the package “modest break” in income taxes.
- The Globe and Mail notes that Mr. Flaherty bragged about taxes not being this low since Lester B. Pearson was Prime Minister.
- The National Post notes that you can bank on the tax cuts because the Liberals have signalled that they would not trigger an election over the update.
- Larry MacDonald writes that the fiscal update funnels “unexpectedly large budget surpluses into broad-based tax reductions while continuing with debt reduction”.
