|
Tory Budget: Overstated Tax Reductions
|
View this Thread in Original format
| AwakenedAddict |
| quote: | http://www.theglobeandmail.com/servlet/story/RTGAM.20060522.wtaxcuts0522/BNStory/Business/home
Tory budget cut take-home pay: report
SIMON TUCK
From Tuesday's (5.23.06) Globe and Mail
The federal government's recent budget chopped personal taxes by about half as much as was advertised and actually lowered take-home pay for many Canadians, a new report by a leading economist says.
The report, to be released Tuesday, says the budget will mean personal tax cuts worth about $9.5-billion over the next two years, when compared with current rates.
By contrast, the government said in its first budget earlier this month that it had cut personal taxes by $19.1-billion over that time frame, or by more than $2 for every $1 in new spending.
Dale Orr, chief economist at Global Insight (Canada) and the report's author, said the government's claims aren't accurate if you compare the budget's cuts against tax rates now in effect. Instead, the government compared the new post-budget tax levels to those from the most recent legislation, which don't include the cuts made by the Liberals late last year.
“We conclude that in budget 2006, there was much less tax relief than advertised,” the Global Insight report said. “When tax relief is measured the usual way, as opposed to the Budget 2006 way, tax relief is only about 1.4 times as much as new spending.”
The Liberal cuts, which were announced in November and have since taken effect, included lucrative reductions to personal income taxes. They were implemented, but the 2006 federal election was called before the cuts had been accompanied by legislation. That allowed the Conservatives to compare their expected tax regime against the older, legislated rates, instead of the newer, unlegislated ones.
Despite massive spending increases over their final four years in power, the Liberals reduced the lowest tax rate to 15 per cent from 16 per cent, effective Jan. 1, 2006. The Conservative budget set the new rate at 15.5 per cent, which means federal income taxes will climb on July 1.
Those tax hikes will add about $4.3-billion to federal coffers over the next two years, although other measures will mean a net reduction of $9.5-billion in personal taxes during that period.
But Mr. Orr said the income tax hikes mean take-home pay — which excludes the new government's cut to the goods and services tax cut and a variety of new tax credits — will drop for many Canadians during the last six months of 2006.
The GST cut will see the federal sales tax drop to 6 per cent from 7 on July 1 and will cost the government an estimated $8.7-billion over the next two years.
Don Drummond, chief economist at Toronto-Dominion Bank, said he agrees with Mr. Orr's conclusion that the government exaggerated its tax cuts, but added that he still gives the Conservatives credit for pulling in the reins on spending. “You still have to look at the overall growth in the tax burden, and it is coming down.”
Mr. Orr said he expects the Conservatives will provide “significant” tax cuts in future budgets.
But the new report on the government's budget claims is important for two reasons: The Harper government prides itself on putting more money into taxpayers' pockets, and the Tories have spoken frequently about the importance of running a more open, honest government. Accountability was one of the government's five top priorities.
Pat Breton, a Liberal spokesman and a former senior official to former Liberal finance minister Ralph Goodale, said he's not surprised by Mr. Orr's findings that the Conservative tax cut claims aren't accurate.
Mr. Flaherty simply ignored Mr. Goodale's income tax cuts, Mr. Breton said. “Flaherty jumped into a time machine.”
A spokesman for Mr. Flaherty couldn't be reached for comment. |
The conservatives actually raised tax rates on the lowest income group from 15-->15.5%! |
|
|
| ShadoWolf |
| quote: | Originally posted by AwakenedAddict
The conservatives actually raised tax rates on the lowest income group from 15-->15.5%! |
Actually the rate in the Income Tax Act (Section 117) is still 16%.
The Lieberals did not actually lower taxes, they just lied about doing so. The "mini-budget" was just a proposal by Minister Goodale (a completly political move), but the law was never actually changed. To make things worse, they sent out revised tax forms costing $20 MILLION, conveniently right smack in the middle of the election campaign. |
|
|
| Jayx1 |
| Is that BEFORE or AFTER the increase in personal deduction limits? It went from 8500 to 10,000. Id say thats a pretty good tax cut for everyone. And they didnt raise taxes, they just didnt implement the liberal tax cut which by the way was a last ditch effort to bribe voters just before the last election. There is a big difference in that. We NEVER saw 15% because the liberal government never lasted long enough after it was passed to see it through. |
|
|
| Jayx1 |
| quote: | Originally posted by ShadoWolf
Actually the rate in the Income Tax Act is still 16%. |
Shhhh dont confuse liberals with facts. It just flusters them LOL |
|
|
| AwakenedAddict |
| quote: | Originally posted by ShadoWolf
Actually the rate in the Income Tax Act (Section 117) is still 16%.
The Lieberals did not actually lower taxes, they just lied about doing so. To make things worse, they sent out revised tax forms costing $20 MILLION, conveniently right smack in the middle of the election campaign. |
That's funny.. I'm in the lowest tax group and when I did my taxes the rate was 15%. |
|
|
| AwakenedAddict |
| The Conservative propaganda wagon rolls out on cue! |
|
|
| ShadoWolf |
| quote: | Originally posted by AwakenedAddict
The Conservative propaganda wagon rolls out on cue! |
I'm just educating you on the facts.
| quote: | Current to May 22, 2006
RSC 1985 c1 (5th Supp) s117
[eff June 14, 2001 to ]
Income Tax Act
R.S.C. 1985, Chapter 1 (5th Supp.), as amended
PART I -- Income Tax
DIVISION E -- Computation of Tax
Subdivision a -- Rules Applicable to Individuals
SECTION 117
Tax payable under this Part
117.(1) For the purposes of this Division, except section 120 (other than subparagraph (a)(ii) of the definition "tax otherwise payable under this Part" in subsection 120(4)), tax payable under this Part, tax otherwise payable under this Part and tax under this Part shall be computed as if this Part were read without reference to Division E.1.
Rates for years after 2000
117.(2) The tax payable under this Part by an individual on the individual's taxable income or taxable income earned in Canada, as the case may be, (in this subdivision referred to as the "amount taxable") for a taxation year is
117.(2)(a) 16% of the amount taxable, if the amount taxable does not exceed $30,754;
117.(2)(b) $4,921 plus 22% of the amount by which the amount taxable exceeds $30,754, if the amount taxable exceeds $30,754 and does not exceed $61,509;
117.(2)(b.1) $11,687 plus 26% of the amount by which the amount taxable exceeds $61,509, if the amount taxable exceeds $61,509 and does not exceed $100,000; and
117.(2)(c) $21,695 plus 29% of the amount by which the amount taxable exceeds $100,000, if the amount taxable exceeds $100,000. |
The only propaganda here was from the Lieberal Minister who, in the middle of an election campaign, claimed he lowered taxes (when in fact he did not, and may never had truly intended to). Even worse, he spent $20 MILLION of taxpayer dollars to send out revised forms, even though the Act itself had not been changed. |
|
|
| AwakenedAddict |
| quote: | Highlights of the 2006 Federal Budget: Personal Tax Rate Changes
source:http://www.kpmg.ca/en/services/tax/tnf/tnfc0618.html
Low personal tax rate changes — The government announced that it will legislate the previously proposed 15% low tax rate for 2005 on income up to $35,595, and increase the rate to 15.5% as of July 1, 2006. The low rate also applies for purposes of calculating the various federal tax credits. The government also confirmed changes to the basic and personal amount, as shown in the table below:
2005 2006 2007
Effective low personal income tax rate
15% 15.25% 15.5%
Upper threshold for income taxed at low tax rate
$35,595 $36,378 Indexed
Basic personal amount
$8,648 $8,839 Indexed + $100
Spouse or eligible dependant amount
$7,344 $7,505 Indexed + $85 |
|
|
|
| ShadoWolf |
| quote: | Originally posted by AwakenedAddict
|
Yes, what's happening is that the government is honouring the former Minister's proposal for 2005, probably because people who aren't familiar with the situation would be outraged if they had to pay back taxes (the extra 1%) based on the revised forms they filled out.
The tax rate for 2006 will drop to 15.5%. |
|
|
| AwakenedAddict |
Ahh yes.
However, the point of me posting the original article is elucidated by this distinction. The proposed 2005 liberal budget (for taxes to be paid in 2006) was used to calculate 2006 income taxes. Yet, when the Conservatives claim responsibility for the tax reductions, they don't use the figures from the 2005 proposed budget(for taxes to be paid in 2006), they use the figures from the 2005 budget.
Can't have the best of both worlds.. chose one method or they other boys. |
|
|
| ShadoWolf |
| quote: | Originally posted by AwakenedAddict
The proposed 2005 liberal budget (for taxes to be paid in 2006) was used to calculate 2006 income taxes. |
Actually that's not quite true. Taxes payable aren't determined until the tax year is over (so Jan 1, 2007). If changes were made to withholding, they were due to Ministerial perogative (shaky legal ground at best... illegal at worst). Again, the Income Tax Act was not changed.
| quote: | Yet, when the Conservatives claim responsibility for the tax reductions, they don't use the figures from the 2005 proposed budget(for taxes to be paid in 2006), they use the figures from the 2005 budget.
Can't have the best of both worlds.. chose one method or they other boys. |
They are using one method: they refer to the actual law, not promises made by desperate politicans. |
|
|
| AwakenedAddict |
| quote: | Originally posted by ShadoWolf
Actually that's not quite true. Taxes payable aren't determined until the tax year is over (so Jan 1, 2007). If changes were made to withholding, they were due to Ministerial perogative (shaky legal ground at best... illegal at worst). Again, the Income Tax Act was not changed. |
So to sum up.. The liberals implement a 15% income tax rate on the lowest income group in the 2005 proposed budget. The conservatives get elected in the meantime and allow the 15% tax rate to be unchanged for taxes paid April 2006 (despite the income tax code stipulating 16% for that income group). The proposed liberal budget is discarded since they are no longer in office and the conservatives implement a 15.5% tax rate in the 2006 budget.
So the conservatives are in actuality lowering taxes for the lowest-income-group. However, they failed to do so to the extent that the liberals had proposed. Still, the conservatives fashion themselves as the "tax reduction party" in order to gain support from low-income constituencies.
| quote: | | They are using one method: they refer to the actual law, not promises made by desperate politicans. |
Get off your high horse! It's one thing to to compare the liberals and conservative on legislation, it's another thing to slander a party based on generalizations. (You're doing pretty well with the facts, and creating an argument around them, but when you say things like "promises made by desparate polititians" & "lieberals" you just looks un-intelligent) |
|
|
|
|
