Canadian Finance Minister Comments On Economic Update

by Mike Godfrey, Tax-News.com, Washington

06 November 2007

Jim Flaherty, Canadian Minister of Finance, spoke out last week about the country's Economic Statement, and the ways in which it will benefit Canadians.

Observing that "our government is establishing a proud legacy of tax relief," Mr Flaherty continued:

"Given the uncertainty in the global economy, now is the time to provide additional tax relief for Canadians. Our strong fiscal position provides Canada with an opportunity that few other countries have - to make broad-based tax reductions that will strengthen our economy."

However, he went on to state that: "We have gone as far as we can for now. "

"We are not prepared to risk Canada's economic future. We must be mindful of the challenges ahead of us and resist the temptation to become complacent," he explained, according to Reuters.

Last week, the Finance Minister announced plans to accelerate tax relief for individuals, families and businesses, unveiling a cut in the federal sales tax to 5% (from 6%) as of Jan. 1, 2008.

He also revealed plans to reduce the corporate tax rate to 15% by 2012 from 22% now, rather than to 18% as previously planned.

Mr. Flaherty touched on the issue of business tax in a recent speech, announcing that:

"We are putting business taxes on a five-year track downward. It will be a steady, predictable reduction in the tax burden that businesses can count on and can plan on."

He added: "We are cutting the business tax rate much deeper and much faster than ever contemplated before. Our Government will make an immediate 1-percentage-point reduction in 2008 in addition to those we have already legislated....This will be followed by ongoing reductions that will bring the tax rate down to 15 per cent by 2012, from more than 22 per cent today."

Flaherty further revealed that:

"With these reductions, Canada's general federal corporate income tax rate will fall by one-third between 2007 and 2012, and Canada's business tax rate will become the lowest among the major industrialized economies."

Concluding his speech to Toronto's Rotary Club, Mr Flaherty reportedly announced that:

"We are leading the way with our tax cuts. The $60-billion tax relief package announced in the Fall Economic Statement will help bring the federal tax burden to its lowest level in nearly a half a century. "

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