Feds slash income taxes, GST

Liberals abstain from vote, Bloc and NDP vote against mini budget
By
|hrreporter.com|Last Updated: 11/14/2007

With the budget surplus topping $16 billion, the House of Commons passed the Conservative's tax-cut-laden mini budget.

Stephane Dion's Liberals opposed the budget and its nearly $60 billion in tax cuts over five years, but abstained from the vote, unwilling to bring down the government on such a voter-friendly issue as tax cuts. The Bloc and the NDP voted against the budget.

The mini budget passed 127-76.

In his mini budget, Finance Minister Jim Flaherty proposed income tax cuts, a one-per-cent cut to the goods and services tax and a major tax break for big business.

The feds will cut the GST to five per cent on Jan. 1, 2008, resulting in an annual average savings of $150 per family.

The feds will also increase the minimum amount Canadians can earn without paying federal income tax to $9,600 from $8,929, retroactive to Jan. 1, 2007.

The government will also reduce the lowest personal income tax rate to 15 per cent from 15.5 per cent, also retroactive to Jan. 1, 2007. As a result, about 385,000 people will be removed from the income tax rolls altogether.

Combined, the income tax measures will save a family earning between $30,000 and $45,000 a year an average of $300, while families earning between $15,000 and $30,000 will save $150.

The feds will also cut corporate taxes, slashing the corporate tax rate to 15 per cent by 2010. This cut will cost the feds about $14.1 billion in tax revenues.

Even after yesterday's cuts, the government still expects a budget surplus of $11.6 billion in the 2007-08 fiscal year. Flaherty said $10 billion of that would go toward paying down the $457-billion federal debt.

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