Goodale Bullish On Tax Cuts For Canada

by Mike Godfrey, Tax-News.com, Washington

10 October 2005

Addressing a parliamentary committee last week, Canadian Finance Minister Ralph Goodale vowed to introduce further tax cuts when the government presents its next federal budget, expected in the first quarter of next year.

Goodale told the members of the House of Commons industry committee on Thursday that the government had reduced taxation every year since 1997, a path that he steadfastly intends to stick to despite the absence of a parliamentary majority and a lack of support for tax cuts from opposition parties.

"Just watch me - we're going to do it again," Goodale remarked.

The minster had earlier told journalists that he would soon unveil new plans to lighten the tax burden on low and middle income earners, although he did not reveal details of any specific tax cuts.

Under proposals presented in the 2005 budget, Prime Minister Paul Martin's government had hoped to cut corporate tax to 19% from 21% by 2010 and eliminate the corporate surtax by 2008. However, the government was forced to abandon the tax cut in the face of opposition from the left-leaning NDP, which demanded that an additional C$4.6 billion, (US$3.7 billion) be spent on low-income housing, the environment and foreign aid.

Goodale is set to reintroduce the tax proposals in a new budget in February or March 2006, although his party must first ensure that it wins a new electoral mandate before doing so.

However, speaking to the Wall Street Journal last week, Prime Minister Martin indicated that new tax cuts would be possible under new legislation governing the allocation of budget surpluses. This would allow the government to allocate any surpluses beyond a contingency reserve to debt reduction, new spending and tax cuts.

"I certainly believe that reducing taxes is an important part of an economic thrust," Martin stated.

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