While the Conservative government has made strides to lower personal income tax rates for Canadians, it still has a way to go before it’s satisfied, says federal finance minister Jim Flaherty.
“We’re reducing taxes, we intend to continue reducing taxes, and we think Canadians pay too much tax,” he said over lunch during a C.D. Howe Institute conference. “We’ve taken some steps on the personal income tax side, but I would like to do more on personal income tax when we have the resources to permit us to do that.”
The government hasn’t addressed income tax as much as it would like to, he admits, but the introduction of the tax-free savings account in the 2008 budget was meant to ease tax burdens. Flaherty predicts that most of this country’s savings in the future will be in the new account. “We think over the course of the next 15 to 20 years, 90% of savings in Canada will be tax sheltered either through RSPs or the tax-free savings account,” he says.
Besides his interest in lowering personal income tax further, Flaherty wants to reduce the corporate tax rate to 25% across the country. The government has already promised to drop the federal rate to 15% by 2012, but he needs the provinces to come on board and cut their rates to 10%.
Many provinces already have, or have taken steps to, reduce the business tax rate, save for Ontario and its premier, Dalton McGuinty, who Flaherty specifically said is not doing enough to stimulate the provincial economy.
“We’ve been gently prodding Premier McGuinty to reduce the corporate tax rates in Ontario,” he says, alluding to the much publicized back-and-forth between the two politicians. “We will continue to raise this subject. We’re certainly looking for more stimulus in the Ontario economy in particular. We’ve done our part at the federal level, but we really need the province to do its part.”
While Flaherty’s speech focused mostly on taxes and the Advantage Canada program, he briefly addressed North America’s economic conditions. He says the government is concerned with the slowdown in the U.S. economy, which is now looking as though it will be “longer and deeper” than he originally anticipated.
Flaherty is specifically worried about “volatility in global financial markets, the sectors of the economy that are struggling in Canada — manufacturing, forestry, auto — and some economists are adjusting their global predictions downward.”
But all the Conservatives can do, he says, is “foster conditions where individuals and business can reach their full potential. We can create an environment that welcomes investments and encourages business to flourish.”
Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com
(04/10/08)