CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. 2007 Promises Modest Tax Cuts For Canadian Taxpayers

2007 Promises Modest Tax Cuts For Canadian Taxpayers

by Mike Godfrey, Tax-News.com, Washington

05 January 2007


The Canadian Taxpayers Federation (CTF) has detailed income and payroll tax changes that came into force on January 1, 2007. These changes are likely to involve modest gains for individuals with families the biggest winners.

“All taxpayers will pay less tax in the New Year,” said CTF federal director John Williamson.

He continued:

“The new employment tax credit will increase to $1,000 for the 2007 tax year, up from $250 in 2006. This fourfold increase permits the finance minister to truthfully assert taxes are going down even though Canadians will pay more payroll taxes next year and the lowest personal income tax rate will rise a quarter-point to 15.5% from 15.25%.

“Without a doubt the biggest winners are families with young children. They will rocket ahead thanks mostly to the monthly $100 payment for each child under age 6.

“Low-income individuals, earning less than $25,000 annually, benefit the most from Ottawa’s new employment tax credit. Also noteworthy are that the larger tax savings for individuals earning $80,000 is due to indexation and how unevenly families with similar income levels are taxed. One the provincial front, Manitoba taxpayers will realize the largest savings due to a drop in its middle income tax rate.”

Effective January 1st, 2007, Employment Insurance (EI) premium rates dropped by seven cents to $1.80 for employees (per $100 of insurable earnings) from the current rate of $1.87. The corresponding employer rate has dropped by 10 cents to $2.52 from the current rate of $2.62. However, the maximum insurable earnings has risen from $39,000 to $40,000. The previous EI threshold increase was in 1995. The seesaw EI changes represent a mere 1.3% reduction from 2006 levels, according to Williamson.

Canada Pension Plan (CPP) premium rates (per $100 of insurable earnings) will remain unchanged at 4.95% paid by employees and 4.95% paid by employers. The threshold has increased to $43,700 in 2007 from the former level of $42,100.

“The net payroll tax bill on workers will increase because the EI tax reductions will be gobbled up by a higher EI threshold and rising CPP payments. Workers will pay $70 more in payroll taxes and employers $65 more,” said Williamson. “Ottawa was wrong to increase the EI threshold when the program continues to amass an annual $2-billion surplus. It is another example of giving a tax break with one hand, by lowering the EI tax rate, and taking it away with the other, by raising the threshold.”

The CTF proposes to increase both the basic personal and spousal exemptions to $15,000 over four years. This will save taxpayers $940 a year. In addition, the top two personal income tax rates should be reduced by 3% – phased-in over three years – from 29%-to-26% and 26%-to-23%.

“It is not sufficient for parliamentarians to only discuss cutting taxes for low- and modest-income Canadians,” concluded Williamson. “According to the OECD and even Canada’s finance department, our personal income tax burden remains the highest of the G-7 nations. This standing has not changed in almost a decade. Broadly-based tax relief in the ’07 budget is necessary to ensure all income earners benefit from lower taxes.”


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »