Flaherty Introduces Legislation To Implement Canada's Economic Action Plan

by Mike Godfrey, Tax-News.com, Washington

10 February 2009

Canadian Finance Minister Jim Flaherty introduced legislation in the House of Commons on February 6 to implement key elements of Canada’s Economic Action Plan.

"Our action plan leverages Canada’s strong economic fundamentals to stimulate economic growth, restore confidence and support Canadians and their families through the current global recession," stated Flaherty. "Our plan will see Canada emerge from this recession on a sustainable fiscal footing, with better infrastructure, a more skilled labour force, lower taxes and a more competitive economy."

The legislation proposes to:

• Increase the basic personal amount that Canadians can earn tax-free and the upper limits for the two lowest personal income tax brackets by 7.5% above their 2008 amounts.
• Increase by CAD1,000 the amount upon which the Age Credit is calculated.
• Increase to CAD25,000 the maximum amount eligible for withdrawal from a Registered Retirement Savings Plan under the Home Buyers’ Plan.
• Extend, for a two-year period, all regular Employment Insurance (EI) benefit entitlements by five extra weeks and increase the maximum benefit duration to 50 weeks from 45 weeks.
• Maintain the EI rate for 2010 at CAD1.73 per CAD100 of insurable earnings — the same rate as 2009 and its lowest level since 1982.
• Extend the Wage Earner Protection Program to cover severance and termination pay owed to eligible workers when an employer does not pay due to its bankruptcy.
• Raise to CAD500,000 the amount of active business income eligible for the 11% small business income tax rate.
• Provide over CAD440m in savings for Canadian industry over the next five years by permanently eliminating tariffs on a range of machinery and equipment to lower costs for Canadian producers in a variety of sectors, such as forestry, energy and food processing. Increase the maximum eligible loan amount under the Canada Small Business Financing Program for loans made after March 31, 2009, potentially increasing lending under the program by up to CAD300m per year.
• Broaden the authority of the Minister of Finance to promote financial stability and maintain efficient and well-functioning markets.
• Provide the Canada Deposit Insurance Corporation with greater flexibility to enhance its ability to safeguard financial stability in Canada.
• Allow Export Development Canada and the Business Development Bank of Canada to extend additional financing to Canadian businesses.
• Establish and fund an office to assist in the transition toward a Canadian securities regulator with willing provinces and territories.
• Modernize the Investment Canada Act to encourage foreign investment and make sure that new investments cannot jeopardize Canada’s national security.
• Introduce provisions to the Competition Act to protect consumers from anti-competitive behaviour as well as unscrupulous business practices.
• Put Equalization growth in line with growth in the economy and ensure fairness in other transfers.

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