Flaherty serves up more tax cuts

Despite warnings from economists of all stripes, Federal Finance Minister Jim Flaherty has announced the government will proceed with its previously promised cut in the GST. But he isn’t stopping there.

In the Economic Statement delivered today, Flaherty announced his intention to slash corporate taxes from the current level of 22.1% to 15% by 2012. The feds want to harmonize corporate taxes with the provinces, to ensure a maximum rate of 25%.

Small businesses will see their tax rates come down earlier than previously promised, falling to 11% in 2008, instead of 2009.

Despite cutting the GST to 5%, effective January 1, 2008, Flaherty is maintaining the GST credit for lower income Canadians.

“Reducing the GST from 6% to 5% builds on the initial GST cut introduced in Budget 2006,” Flaherty said in his speech. “For consumers, the total savings from the 2-percentage-point reduction will amount to approximately $12 billion next year.”

As for personal income taxes, the basic personal amount will rise to $9,600 for 2007 and 2008, and climb to $10,100 in 2009. Flaherty also reinstated the last Liberal tax cut, meaning the lowest personal tax rate will be 15%, down from 15.5%.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com