Harper Adds To His Low Tax Plan To Win Over Electors

by Mike Godfrey, Tax-News.com, Washington

05 April 2011

Outgoing Canadian Prime Minister Stephen Harper has begun his election campaign by reiterating his party's commitment to a low tax plan, and announcing a new tax cut for families.

In a bid to win over electors in the upcoming May 2 election, and demonstrate his party's pledge to aid the Canadian economy recovery through a system of low taxes, Harper has stressed that although the country is "rounding the corner, entering the home stretch", work remains to be done to complete the recovery. Harper's minority Conservative government fell on March 25, following the passage of a vote of no confidence in his administration.

Thus far, Harper has reiterated two key policies announced in the federal Budget on March 22, which, because of the government's collapse, did not make it to a vote. Harper reminded electors of the Conservative pledge for a two year extension of the accelerated capital cost allowance treatment for investment in machinery and equipment by Canadian manufacturers. According to Harper, this would save Canadian manufacturers over CAD600m in 2012-13 and an estimated CAD2.5bn during the next five years.

In addition, he has said that a re-elected Conservative government would establish a one year employment insurance (EI) tax break for small businesses, to enable them to hire new employees. The creation of new jobs is deemed "essential" to the economic recovery by Harper, with the measure "directly targeted at job creation". This tax break will provide a one time credit of up to CAD1,000 in 2011, and, by the party's figures, will be available to approximately 525,000 employers, reducing their 2011 payroll costs by about CAD105m.

Harper's comments reinforce the speculation that, if re-elected, his party is likely to reintroduce its controversial Budget largely intact. Outgoing Finance Minister Jim Flaherty had stated shortly after the government's defeat that while depending on timing, there might have to be an update of economic data, fundamentally: "It will be the same document".

In addition to his confirmation of these Budget measures, Harper has also announced his intention to introduce a new tax measure. A family tax cut would allow families with children to share up to CAD50,000 of their household income, for federal tax purposes. Harper argues that this will provide tax relief for 1.8m Canadian families, with an average saving of CAD1,300 per year. However, it will cost the government around CAD2.5bn per year. Nonetheless, Harper has stressed: "We understand that family budgets are stretched and by making the tax system fairer for families we will make it easier for parents to cover the day to day costs of raising their kids".

Recommended