To further simplify the tax code, over a dozen various tax credits would be replaced with higher personal and spousal exemption ($15,000 instead of $9,600), with only a handful of deductions maintained (age amount, child/eligible dependent allowances, RRSP contributions and charitable giving). If implemented, the proposal would provide overall personal tax relief of $25B by 2012.
“The tax relief proposed by the CTF is readily affordable by 2012, provided modest spending restraint is undertaken by the federal government … Restraining federal spending to 2.5% nominal growth per year, beginning in 2008, would produce planning surpluses of $21.9-billion and $28.1-billion [in fiscal 2011/12 and 2012/13]. This implies that personal tax relief of $25-billion per year is possible by 2012, while setting aside $3.0-billion annually for debt reduction and without running a fiscal deficit.”(The C.D. Howe’s Impact of Fiscal Measures is included in the report.)Notice, the CTF doesn't even mention spending freeze, let alone bringing the program spending back to 1996/97 level. The CTF only calls for a spending restraint, suggesting a 2.5% limit on program spending increases. With tens of billions in wasteful spending, that have accumulated since 1996/97, such restraint could be achieved and overachieved quite easily.
“The decisions Finance Minister Jim Flaherty makes in the upcoming budget will determine the size of tomorrow’s income tax cut,” noted Williamson. “If the Conservatives exercise modest spending restraint they will finally be able to deliver meaningful personal income tax relief. We must not forget that Canada has the highest personal income tax burden of G7 nations, yes even higher than the French.”
If you think that the CTF proposal only benefits the rich - think again. While the high-income earners may be saving 1 to 4 cents on each extra dollar they make, the low- and middle- income Canadians will see the biggest reduction percentage-wise:
- Nearly 1.4 million low-income Canadians (individuals making between $9600 and $15,000, families making between $19,200 (+$2038 per child) and $30,000 (+$2200 per child) will be removed from the income tax roll. Their tax savings will be 100%.
- Individuals making between $15,000 and $37,885 (those that are currently in the 15% bracket) will be saving between 20% and 100%, depending on their income level.
- There will be no more income tax penalties for single income families, earning between $37,885 and $80,000. Their tax burden will go down by at least 38%.