Goodale introduces retroactive tax
[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
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
> $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.
> 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.
> 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.
> 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
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
NDP finance critic Judy Wasylycia-Leis described Goodale's
presentation as the Liberal election platform and said it was
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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