June 29, 2007
Provincial Taxpayers Will See Benefit of Largest Tax Cut in History Starting July 1
Next week marks a significant turning point for taxpayers in Newfoundland and Labrador, the Honourable Tom Marshall, Minister of Finance and President of Treasury Board, said today. Effective July 1, 2007, $160 million annually in the way of tax cuts announced in Budget 2007 will be going back into the pockets of hardworking Newfoundlanders and Labradorians.
Statutory tax rates will be reduced as follows: from 10.57 per cent to 8.7 per cent on the first bracket; from 16.16 per cent to 13.8 per cent on the second bracket; and, from 18.02 per cent to 16.5 per cent on the third bracket. The nine per cent surtax is also eliminated. In addition, to protect taxpayers from the effects of inflation, annual indexing will occur for tax brackets, most non-refundable tax credits and certain benefits, such as the Low Income Senior�s Benefit and Low Income Tax Reduction Benefit.
"Beginning with the first paycheques after July 1, the people of this province will take home more of their earnings thanks to the tax measures announced in Budget 2007," said Minister Marshall. "Taxpayers will realize a provincial income tax savings of 16 per cent at the very least. For example, for people with net income up to $35,000, the savings can be as much as 20 per cent. Individuals with taxable income up to $13,000 will pay no provincial personal income tax, while families with taxable income of up to $21,000 will also be relieved of provincial income tax."
"Not only do these tax measures put money back into the hands of our residents, we have taken our tax rates from being the highest in Atlantic Canada to the lowest. In doing so, we are making the province far more attractive to people and companies looking to establish in the Atlantic region," said Minister Marshall.
The minister said the Provincial Government�s unwavering commitment to responsible fiscal management practices and the 2005 Atlantic Accord agreement negotiated by Premier Danny Williams has allowed the province to accommodate such tax measures as well as to pay down on debt and make significant social and economic investments.
To complement the Budget 2007 reductions in statutory rates the Provincial Government has adjusted the low income benefit threshold for individuals to $13,000 and for families, including single-parent families, 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 province has also adjusted the qualifying threshold for married seniors to avail of the Seniors� Benefit. In 2006, a senior couple received the full Seniors� Benefit if the couple�s 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.
Other tax measures announced in Budget 2007 include reducing the tax rate applicable to the private sale of used vehicles from 15 per cent to 14 per cent, consistent with the tax rate imposed on vehicles sold through dealerships. Also, the small business corporate income tax threshold is increased from $300,000 to $400,000.
"An equitable tax regime is a vital component of a strong and diversified economy. The tax measures outlined in Budget 2007 are not only necessary, but they are being implemented in a fiscally responsible manner," said Minister Marshall. "Looking back on the dire fiscal situation we inherited in 2003, our ability to now reduce personal income tax rates from the highest in Atlantic Canada to the lowest is a true indicator of the tremendous growth this province is experiencing under the Williams Government."
For further details concerning the new tax measures effective July 1, 2007, go to //www.gov.nl.ca/releases/2007/fin/0426n06bk1.htm
2007 06 29 9:30 a.m.
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