Canadian Government To Offer Tax Breaks On Strength Of Surplus

by Mike Godfrey, Tax-News.com, Washington

27 January 2003

The Canadian government is likely to provide tax breaks for companies, middle- and upper-income earners, and lower-income families, according to recent reports.

As a result of a budget surplus which is likely to be higher than predicted, at around $9 billion for fiscal 2003-04, the Department of Finance is set to slash the unpopular capital tax - a move which is likely to prove popular with the country's big businesses, boost RRSP (registered retirement savings plan) contribution limits, and raise or accelerate the child benefit program.

Although none of the proposed measures is earth-shattering, given that new spending programs are likely to gobble up a substantial portion of the surplus, the equality of treatment afforded to the different income groups of taxpayers is likely to mean that the Canadian government avoids the accusations of partiality recently levelled at President Bush following the launch of his economic stimulus plan.

Speaking to the Globe and Mail newspaper on Friday, an unnamed government source revealed that this had, indeed been the intention:

'The government always tries to provide a balance,' he explained, adding that: 'You don't want to be seen to be giving a break only to business, or just the rich or the poor.'

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