Income Tax Cuts Could Provide Relief

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    Large-scale personal income tax cuts could provide relief for working Canadians and lay the foundation for long-term economic growth, says a study released by the Fraser Institute. ‘Reforming Federal Personal Income Taxes: A Pro-Growth Plan for Canada’ says Ottawa could eliminate many tax credits, deductions, and other tax breaks (broadly known as tax expenditures), which would free up $20 billion. This, combined with expected surpluses in the future, would allow the government to eliminate Canada’s two middle-income tax rates (22 and 26 per cent) and create a new tax landscape, with just two personal income tax rates—15 per cent for almost all Canadians and 29 per cent for top earners (roughly two per cent of tax-filers). “Eliminating the middle-income tax rates would mean more take-home pay for middle-class families and broad increases in the incentives for Canadians to work, save, invest, and engage in entrepreneurship,” says Charles Lammam, study co-author and associate director of tax and fiscal policy at the Fraser Institute. Moreover, eliminating or curtailing the myriad tax credits and deductions would also simplify the tax system, reducing the cost of complying with the tax code (accountants, tax-filing software, etc.) for Canadians.