Economic Statement – Strong Leadership. A Better Canada.

November 19, 2021

On October 30th, the Honourable Jim Flaherty, Minister of Finance, presented the Government’s 2007 Economic Statement, which proposed broad-based tax relief for all Canadians, including a further reduction of the Goods and Services Tax (GST). This relief has firmly established our Government’s proud legacy of tax relief by delivering on more than 60 tax cuts since coming to office 21 months ago.

The most significant feature of the Tax Relief Package is an additional 1-percentage-point reduction in the GST, effective January 1, 2008. This tax cut fulfills the Government’s key campaign commitment and builds on the initial GST reduction introduced in Budget 2006. For consumers, the total savings from the 2-percentage-point reduction in the GST will amount to approximately $12 billion next year, which places more money in the pockets of Canadians and provides businesses with more freedom to create jobs and make further investments.

Individual savings will be significant. For example:

• A family purchasing a new $300,000 home will save $3,840 in GST.
• A family spending $10,000 on home renovations will save $200 in GST.
• A family spending $30,000 on a new minivan will save $600 in GST.
  

Additional tax relief will be delivered to individuals and families by:

• Increasing the basic personal amount to $9,600 retroactive to January 1, 2007. The basic personal amount will be increased to $10,100 on January 1, 2009. This proposal will provide Canadians with an additional $2.5 billion in tax relief in 2007 and 2008.
• Reducing the lowest personal income tax rate to 15 per cent from 15.5 per cent retroactive to January 1, 2007.
  

Families earning between $15,000 and $30,000 will pay, on average, almost $180 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement and families earning between $45,000 and $60,000 will pay, on average, almost $400 less in tax in 2008. In addition, families earning between $80,000 and $100,000 will pay, on average, $602 less in tax in 2008, as a direct result of the latest tax measures.

For Canadian businesses, the Government will be:

• Reducing the general corporate income tax rate to 15 per cent by 2012, starting with a 1-percentage-point reduction in the rate in 2008 beyond the already scheduled reductions.
• Reducing the small business income tax rate to 11 per cent in 2008, one year earlier than scheduled.
  

Our Government also announced that it is planning additional debt reduction of $10 billion this fiscal year, for a total of more than $37 billion in debt relief since coming to office. This is the equivalent of $1,570 for each man, woman and child in Canada. As a result, the Federal Government’s debt-to-GDP ratio—its debt load as a share of the economy—is expected to fall below 25 per cent by 2011–12, three full years ahead of the original target and its lowest level since the late 1970s. The additional debt reduction found in the Economic Statement means that the total value of personal income tax relief provided under the Tax Back Guarantee will rise to $2.5 billion by 2012–13.

Our Government is committed to getting things done for all Canadians and the Economic Statement builds upon this principle. Canada’s economic and fiscal fundamentals are solid and our economy is on its way to posting another strong year. The tax relief measures included in the Economic Statement recognizes our country’s current strength and will inevitably help those who need it most – our families.