April 26, 2007
Largest Tax Cut in the History of Newfoundland and Labrador
Sweeping changes by the Williams Government to the provincial personal income tax regime represent the largest tax cut in the history of the province. These changes will put more money in the pockets of Newfoundlanders and Labradorians and significantly improve the competitive position of Newfoundland and Labrador, the Honourable Tom Marshall, Minister of Finance and President of Treasury Board, announced today. The total cost of these reductions is $111.3 million for Budget 2007 and $160.5 million annually once fully annualized.
"Never before in our history have we had the ability to address our high personal tax levels in a meaningful way," said Minister Marshall. "Today�s tax reductions will result in Newfoundland and Labrador having the lowest personal income tax rates in Atlantic Canada and will assist in building a stronger more diversified economy as we move toward being less reliant on revenues from our non-renewable resources. We are committed to using our offshore resources to reduce debt, to provide a more equitable tax regime, and to improve economic opportunity. These are all issues which are consistent with the national interest, and consistent with the principles of the Atlantic Accord."
Effective July 1, 2007, the following reductions will be made to the province�s personal income tax rates:
As a result:
In addition, to protect taxpayers from the effects of inflation, tax brackets, most non-refundable tax credits and certain benefits will be indexed annually, commencing July 1, 2007.
Other new initiatives announced include an adjustment to the income threshold to which the province�s Low Income Tax Reduction applies. In 2006, a single person with income less than $12,000 was not required to pay provincial personal income tax. Effective January 1, 2007, the threshold has been adjusted to $13,000 and this amount will be indexed in 2008. For families, including single-parent families, the income threshold has been adjusted from $19,000 to $21,000. In 2008, approximately 31,100 individuals will receive the Low Income Tax Reduction compared to 25,900 under the old system, an increase of 5,200 beneficiaries of which 4,000 will no longer pay any provincial income tax.
The Seniors� Benefit for married seniors has been enhanced by adjusting the qualifying income threshold. In 2006, a senior couple received the full Seniors� Benefit if their combined income was less than $15,032, and received a partial benefit with combined income up to $21,482. For the 2007 year, the income thresholds have been adjusted so that the full benefit is received for incomes up to $25,000 and the partial benefit is received for incomes up to $31,587.
About 3,800 senior couples will receive a Seniors� Benefit cheque for $768 in October this year. Another 3,200 will receive a cheque for a partial benefit. This will increase the total cost of the Seniors� Benefit to $12.2 million, an increase of more than $4 million over last year. As a result, in 2008, approximately 7,000 senior couples will receive the Seniors� Benefit compared to 1,100, an increase of 5,900 couples.
The Williams Government has also reduced the Retail Sales Tax rate applicable to the private sale of used vehicles from 15 per cent to 14 per cent and adjusted the small business corporate income tax threshold from $300,000 to $400,000.
"The people of Newfoundland and Labrador, for far too long, have borne a level of personal income taxation that is exceptionally high, compared to other Canadian provinces," said Minister Marshall. "Our high provincial personal income taxes have created a disincentive for people to work and achieve their full potential and have been an obstacle in retaining the highly-skilled people we need."
"Enabling taxpayers to keep more of their hard-earned money will stimulate the economy," said the minister. "The people of the province know best how to spend their money and whether they decide to spend or invest savings realized from these tax reductions, they are encouraging economic activity and bringing even greater financial stability to the province."
Minister Marshall said a critical element of a competitive economy is its taxation regime and the province�s personal income tax system has been out of line with its Atlantic Canadian counterparts. "The tax regime announced in Budget 2007 will make the province far more attractive to people and companies looking to establish in the Atlantic region. Like all provinces in the new economy, Newfoundland and Labrador must compete internationally, but it must first put itself in a tax competitive position within the Atlantic region," said Minister Marshall.
Minister Marshall further announced government is eliminating and reducing a number of provincial fees. "As a result of our fee review announced in Budget 2006, 60 fees will be eliminated, 100 fees will be reduced and admission fees for 12 historic sites will not be imposed one day each week. These fee measures will put an additional $3.4 million back into the hands of individuals and businesses," concluded Minister Marshall.
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2007 04 26 2:05 p.m.