Canada cuts GST to five per cent
Politics Watch ® News Services
October 30, 2007, updated 4:50 p.m.
|Canadian Finance Minister Jim Flaherty.
OTTAWA (PoliticsWatch.com) —
Finance Minister Jim Flaherty announced Tuesday the federal government will cut the GST to five per cent effective January 1, 2008.
The announcement came as part of a fall economic update that
included income and corporate tax cuts.
In total, the federal government announced an additional $60 billion
in new tax cuts.
The tax cuts measures are contained in a ways and means motion that
was introduced in the House of Commons on Tuesday.
Ways and means motions are confidence matters and the government
will need the support of one of three opposition parties to pass the
legislation and avoid an election.
Bloc Quebecois leader Gilles Duceppe and NDP leader Jack
Layton said their parties will vote against the motion, but the Liberals
will not defeat the government on the motion even though Liberal
leader Stephane Dion said his party was in total disagreement
with the fiscal update's direction.
Dion told reporters that the Liberals will "choose our time"
for an election and now is not the time.
A spokesman for Flaherty told reporters at a media lock up that the
vote in the House of Commons on the ways and means motion could come
as early as Wednesday.
Other highlights of the fiscal update include an increase in the
basic personal exemption to $9,600 retroactive to January 1, 2007 --
an increase from $8,929. Flaherty said the basic personal exemption
will be increased again in 2009 to $10,100.
"These tax cuts will move some 385,000 people off the income
tax rolls altogether," Flaherty said.
The government has also reduced the lowest income tax rate to 15 per
cent from 15.5 per cent retroactive to January 1, 2007. The Liberals
had lowered the tax rate to 15 per cent shortly before losing
power in the 2006 election, but the Conservatives reversed that cut
in their first budget in order to pay for the first one-per-cent
reduction in the GST.
Flaherty also announced a five-year plan for major corporate tax
cuts that will see the federal corporate income tax rate fall to 15
per cent by 2012 from 22 per cent currently.
"This is a substantial shot of adrenalin for all Canadian
businesses," Flaherty said.
The economic update also shows that Canada's era of huge budget
surpluses will continue.
The finance department estimates Canada will post a budget surplus
of $11.6 billion this fiscal year, $4.4 billion in 2008-09, $4.3
billion in 2009-10, $7.5 billion in 2010-11, $10.2 billion in
2011-12 and $12.8 billion in 2012-13.
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