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Goodale introduces retroactive tax cut

[PoliticsWatch Updated 6:00 p.m. November 14, 2005]

OTTAWA  — Less than a week before his government is set to suffer a defeat in a non-confidence motion in the House of Commons, Finance Minister Ralph Goodale announced $39 billion in planned spending and tax cut measures including a retroactive tax cut.  
  

The retroactive tax cut will have an impact on the Canadians in the lowest tax bracket who currently pay 16 per cent of their income in federal income tax. 

The basic personal exemption of $8,148 (the level of income which is tax free) is being increased $500 more dating back to January 1 of this year. As well, the lowest tax rate is dropped to 15 per cent from 16 per cent retroactively as well. 

The personal exemption is increasing another $200 next year. 

The Liberals' plan will have the greatest impact on those earning $35,595 or less a year. 

Goodale said his plan would reduce the tax burden on a two-income family with a $60,000 income by 20 per cent this year. 

Among other highlights

Education

> $2.2 billion over five years to "improve student access" to post-secondary education.

> extend first-year grants for low-income students to cover four years of university. 

> increase the level of university funding for indirect research costs to $500 million a year. 

Trade

> A new trade strategy to be called The Global Success Fund for Canadian firms in the value-added portion of the global supply chain totaling $480 million. 

Taxes

> End the capital tax in 2006, two years earlier than the original 2008 deadline

> Increase the top tax rate from $116,000 to $200,000 in the course of five years. 

Debt Reduction

> The government has set a new target for a debt to GDP ratio of 20 per cent by the year 2020. The current debt to GDP ratio target is 25 per cent.

The Liberals' series of measures announced along with the fiscal update were applauded by the Canadian Chamber of Commerce. 

"The government has responded to the calls from business to make Canada's tax policies more competitive and to make the economy a priority," said Nancy Hughes Anthony, president of the chamber. 

But the opposition parties were less than thrilled about Goodale's announcement and called it a cynical attempt to buy votes. 

Conservative MP Monte Solberg, who withdrew a motion to ban Goodale from appearing before the committee, said after the finance minister's hour-long presentation that he had "abused" his invitation to appear before the committee. 

"You spent a lot of your presentation electioneering," said Solberg. "The finance committee is not a prop of the Liberal party."

NDP finance critic Judy Wasylycia-Leis described Goodale's presentation as the Liberal election platform and said it was "disturbing."

Goodale defended his economic statement and said it "was not a budget."

"I am pursuing the normal flow of events," he said.

However, Goodale later admitted that he decided to include the retroactive tax cut in his presentation only last week after NDP leader Jack Layton said he could no longer support the government in a confidence vote in the House of Commons.

The opposition parties are prepared to bring forward two motions in the next two weeks. One to force the government to call an election in early January and one to defeat the government if it does not agree with the election motion. 

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