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NLIS 3
July 26, 2000
(Finance)

 

Minister announces tax on income rates for 2001 taxation year

Minister of Finance Lloyd Matthews today announced that the province has taken steps to move to a Tax on Income system for the 2001 taxation year. He also announced the tax rates applicable to each tax bracket.

"Government is following through on the commitment we made last fall to move to a tax on income system," said Minister Matthews. "De-linking from the federal system will provide the province with greater control over its own tax regime. It will provide a more predictable, stable revenue base, and enhance the province�s ability to tailor its tax system to its own fiscal, economic and social circumstances.

Effective January 1, 2001, the new tax brackets and rates will be: 10.57 per cent on taxable income from $0-29,590; 16.16 per cent on income from $29,591 to $59,180; and, 18.02 per cent on income $59,181 and greater. Each tax payer will earn their first $7,410 tax free. Non-refundable credits will be set at 1999 levels, and there will be a surtax of nine per cent of tax on income in excess of $60,000.

Last fall, government announced a three-year personal income tax reduction that will reduce the previous rate of 69 per cent of federal basic tax to 62 per cent in 2000, 55 per cent in 2001, and 49 per cent in 2002. By 2002, that program will put $85 million annually back into the hands of the province�s taxpayers. Because of changes in the tax system on January 1 and July 1 of this year, taxpayers will receive $42 million in provincial tax savings this year. When combined with the $18 million in federal tax savings announced in February, Newfoundlanders and Labradorians will pay $60 million less in personal income tax for the 2000 tax year.

The Tax On Income structure for Newfoundland and Labrador for 2001 has been designed so that taxpayers will receive the same savings as previously announced in November 1999 under the old system. The annual provincial tax savings for 2001 will be $60 million compared to 1999, a total of $102 million over the first two years of the tax reduction program.

Minister Matthews stated that all provinces, excluding Quebec which administers its own income tax system, have committed to move to Tax On Income, either in 2000 or 2001.

Media contact: Paula Dyke, Communications, (709) 729-0329.

2000 07 26                      3:00 p.m.


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