Canadian Government Sticking To GST Pledge

by Mike Godfrey, Tax-News.com, Washington

06 April 2006

In the throne speech delivered by Governor General Michaelle Jean in the Senate in Ottawa on Tuesday, the newly-elected Conservative government of Stephen Harper reiterated its commitment to cutting tax during its term in office.

"This Government believes that Canadians pay too much in tax. The Government's tax plan will, over time, reduce the tax burden on all Canadians," Jean stated.

One of the the key elements of the Conservative election manifesto was a pledge to cut goods and services tax by 2% over the course of its mandate, starting with an immediate 1% cut to 6%.

"Cutting the GST will help all Canadians deal with the rising cost of living, put money back in people's pockets and help stimulate the economy," Jean continued.

"Cutting the GST is the best way to lower taxes for all Canadians, including low-income Canadians who need it most," she added.

However, the Conservatives have had to temper their tax cutting ambitions somewhat since taking office and the Harper government has stressed the need to remain "fiscally responsible".

Speaking to reporters last month, Finance Minister Jim Flaherty admitted that the government will find it "challenging" to follow through on an election pledge to eliminate capital gains tax profits that are reinvested after six months.

Flaherty later told an audience of business people that the government will be "taking some time" to consult Canadians before moving forward with the capital gains tax initiative.

"We have to be fiscally responsible so we're not going to do everything at once. Nor did we say in the platform that we would do everything at once, but we will keep our commitments over time," Flaherty stated.

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