Canadian Tax Cut Updates

Tax Cut highlights:

• The Goods and Services Tax will be cut an additional 1 per cent as of Jan. 1, leaving the federal consumption tax at 5 per cent. The GST cut will cost the government about $5.5-billion. But the GST credit for low-income Canadians will remain at its current level, said Mr. Flaherty

• The basic personal income-tax exemption will increase to $9,600 from the current $8,929, retroactive to 2007. And it will increase again to $10,100 as of Jan. 1, 2009.

• The government is reducing the lowest personal income-tax rate to 15 per cent from 15.5 per cent, a retroactive change that will also be felt at tax-time this coming year.

• There will be a cut to corporate taxes of 1 per cent in 2008 with on-going reductions that will see business taxes fall down to 15 per cent by 2012 from 22 per cent today. That will leave Canada with one of the lowest corporate tax rates among the industrialized economies.

• The government will still have $10-billion in surplus cash to apply to the national debt.