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article imageOttawa, Canada: Government Makes Bold Move with Mini-Budget

By Bob Ewing     Oct 30, 2007 in Politics
Canada's Minister of Finance Jim Flaherty has released a mini-budget which will please Canadian families and Corporations but not the the opposition. The mini-budget will not be opposed by the opposition Liberals.
It started out as a regular fall economic update but by the time Canada’s finance Minister Jim Flaherty was finished he had rolled out a mini-budget. Canadian corporations and taxpayers are likely to be pleased by the measures it contain
A few of the mini-budget highlights:
-GST cut one percentage point to five per cent, effective Jan. 1, 2008.
-Personal income-tax cut retroactive to Jan. 1, 2007, cutting lowest marginal tax rate to 15 per cent from 15.5 per cent.
-One percentage point cut in corporate tax to 19.5 per cent in 2008.
-Reduction in corporate tax rate to 15 per cent by 2012.
-Small business income tax reduced to 11 per cent by 2008.
"These are historic tax reductions, they are very bold, particularly on the corporate side," said Flaherty.
Canadians need not worry the government’s pledge to keep the books balance will still be kept. Do not look for any major spending increases though.
"The cupboard isn't bare, we're still in surplus," Flaherty said. "And I don't expect any lavish spending programs."
Rumours raced around Ottawa that this rather rushed economic update was an attempt by the Prime Minister to trigger an election as the announcement of a GST cut might anger the Liberals and the NDP are strongly opposes to any corporate tax reductions.
NDP leader Jack Layton and Bloc Quebecois's Gilles Duceppe have said their members would vote against the mini-budget when it is placed before the House of Commons on Wednesday.
As for the Liberals, the leader, Stephane Dion, said his party would not vote against the mini-budget. "It's a big mistake," he said. "We will choose our time when we will decide to put this government down - it will not be tomorrow."
Dion feels that the money raised by the GST would be better used on investments, and corporate and personal cuts that would stimulate savings and investments and help the Canadian economy.
"Taxes haven't been this low since Lester Pearson was prime minister," Flaherty said, "This is an achievement we can all be proud of."
The business community has, so far, responded favourable to the cuts in particular, the pledge to reduce the corporate income tax by one percentage point starting next year and to accelerate future reductions that will take the rate to 15 per cent by 2012.
Families are also likely to respond positively, as the new measure include plans to reduce personal income taxes for a typical two-income family of four earning $80,000 by more than $400, and for a single worker earning $40,000 by almost $225.
More about Flaherty, Taxes, Budget
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