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November 5, 1999
(Executive Council)


The following is being distribution at the request the Premier's Advisory Council on the Economy and Technology:

Advisory Council releases report on tax review

The Premier's Advisory Council on the Economy and Technology (ACET), chaired by Peter Woodward, today released its report on Provincial Tax Review. The council was given a mandate to examine the tax burden on individuals and business to ensure our overall tax regime is fair, competitive and effective, while providing adequate revenues to maintain a responsible budgetary position. The report reflects the council's consideration of presentations made during public consultations held throughout the province in August and September.

"Newfoundlanders and Labradorians feel that personal income tax is too high. An efficient and effective health care system is also a priority," said Mr. Woodward. "For the business community, the main priorities are a reduction in personal income tax as well as the elimination of the payroll tax. We had to balance the need for a competitive tax environment with the ability of the province to provide sustainable tax reductions and a reasonable and appropriate level of public services. Our recommendations reflect that balance."

The Council held 11 public meetings around the province. A total of 98 individuals or groups made presentations, either verbally or through written submissions.

The council accepts the prevailing view that high personal income tax rates slow economic growth and result in fewer people paying more tax, rather than more people paying less tax. To improve the competitive position of the province, the council recommends measures to make the personal income tax climate more competitive.

These recommendations include the immediate reduction of the personal income tax rate from 69 per cent to at least 64 per cent and over the next three years, lowering the rate by at least 10 percentage points. In addition, the council recommends that government undertake a comprehensive review of the health care system to ensure that health care funding is being spent in an efficient and effective manner.

The council also recommends various tax measures aimed at making the business climate more competitive and equitable, especially for small and medium businesses. These include measures to increase the exemption threshold of the payroll tax, and move to its eventual elimination. As well, the council recommended that the Corporate Income Tax rate for manufacturing and processing activities be increased to bring it more in line with rates of other provinces.

"While we heard many things from many people, our obligation was to make recommendations which were realistic, achievable and sustainable," noted Mr. Woodward. "We chose to focus on personal income tax and the payroll tax as the means to attain those goals."

Media contact: Peter Woodward, Chair of the Premier's Advisory Council on the Economy and Technology, (709) 896-2421.

1999 11 05                      11:15 a.m.


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