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The 2000 Economic Statement and
Budget Update
Cutting Taxes Substantially and Fairly
October 18, 2000
The 2000 Economic Statement and Budget Update
builds on Budget 2000 by cutting taxes further and faster.
The combined tax measures outlined in Budget 2000
and the Update deliver - by far - the largest tax cut in Canadian history –
some $100 billion in cumulative tax relief by 2004-05.
But it is not such a large tax cut that it will
impair our ability to deliver the essential services – such as health care -
that Canadians rely on as part of our shared quality of life.
All Canadians will get a federal tax cut --
moderate and middle-income Canadians in particular. 52% of our tax cuts go to
Canadians making $60,000 or less.
Almost all of the cuts will take effect in less
than two-and-a-half months
By 2004-05, Canadians’ average personal income
tax burden will be 21% less – and 27% less for families with children.
Next year, a single parent with one child earning
$33,000 will get a 100% tax cut – or $900.
Next year, a one-earner family with two children
making $40,000 will get a tax cut of 32% – or $1,100. In less than 4 years
their tax cut will be 59%.
Next year, a two-earner family of four with a
combined income of $60,000 will get a tax cut of 18% - or $1,000. In less than 4
years, their tax cut will be 34%.
Cutting Income Tax Rates
All personal income tax rates will drop as of
January 1, 2001:
- The 17% rate will drop to 16%;
- The 24% middle rate – reduced from 26% last
July – will be cut to 22%;
- The 29% tax rate will be reduced to 26% on
incomes between about $60,000 and $100,000; and,
The deficit reduction surtax will be
eliminated.
Additional Tax Measures for Those Who Need it
Most
Effective July 1, 2001, the Canada Child Tax
Benefit for low and middle-income Canadians will be raised – with maximum
benefits for the first child rising to more than $2,500 in less than 4 years.
Effective January 1, 2001, the Disability Tax
Credit amount will be raised to $6,000 from $4,293.
Effective January 1, 2001, the credit amount for
caregivers of dependent relatives who are elderly, infirm or disabled will be
increased to $3,500 from $2,386.
Tax Measures to Encourage Entrepreneurship,
Jobs and Growth
The capital gains inclusion rate will immediately
be further cut from two-thirds to one half.
Tax-free rollovers will immediately be expanded
and made available to more businesses.
A legislated timetable will be provided for
accelerating corporate income tax cuts from 28% to 21% – with a one point drop
in 2001 followed by a two point cut in each of the following three years.
One-Time Relief for Heating Expenses
In response to rising energy prices
and heating costs, in early 2001, the government will provide one-time
relief from heating expenses to help low and modest income Canadians.
The relief will be $125 per person and $250 per
family.
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