The 1999 Budget: Tax Relief and Improving Tax Fairness

Tax relief and improved tax fairness are essential to improving Canadians' standard of living and quality of life.

But we want tax relief to be permanent, fair and affordable. And our priorities reflect this approach:

• Tax relief for low- and middle-income Canadians is our top priority;
• Broad-based tax relief should focus first on personal income; and,
• Broad-based tax relief should not be financed with borrowed money.

In each of our budgets we have introduced targeted tax relief where the payoff was substantial and the need greatest: for students, charities, persons with disabilities and children in low-income families.

Balancing the budget in 1997-98 allowed us to begin the process of broad-based tax relief in the 1998 Budget -- with some $8.8 billion in tax reductions over the next three years; benefiting 14 million Canadian tax payers, and removing some 400,000 lower income Canadians from the tax rolls altogether.

Substantial and Fair Tax Relief

Our 1999 Budget builds on last year's measures -- providing an additional $7.7 billion in tax reductions over the next three years, and removing an additional 200,000 lower income Canadians from the tax rolls.

Combined with the measures outlined last year, the 1999 Budget delivers $16.5 billion in tax relief over three years -- $3.9 billion in 1999-2000, $6 billion in 2000-01, and $6.6 billion in 2001-02.

And for the first time since 1965, not a single penny has been borrowed to pay for it:

• Single tax payers earning $20,000 or less will see their taxes reduced by at least 10%.
• Typical one-earner families with two children and incomes of $30,000 or less will pay no net federal income tax;
• Families with incomes of $45,000 or less will have their taxes reduced by a minimum of 10% -- and in some cases more!

Every Canadian taxpayer can now look forward to a tax cut -- and 600,000 lower- income Canadians will no longer pay any federal income tax at all.

Increasing Tax-Free Income

As of July 1 1999, the Basic Personal Exemption will be increased by $175 to $7,131– removing an additional 200,000 lower-income Canadians from the tax rolls in addition to the 400,000 who were removed as result of the $500 increase we announced in 1998. And bringing the total for the two increases to 600,000.

Eliminating the 3% Surtax

As of July 1, 1999, the 3 percent surtax on personal income will eliminated for all Canadians -- completing a phase out we began in 1998.

Broadening The Canada Child Tax Benefit

By July 2000, the Canada Child Tax Benefit (CCTB) will be enhanced by an additional $300 million to extend benefits to modest and middle-income families.

This will be done by increasing the income threshold at which CCTB benefits start to be reduced -- from $25,921 to $29,590.

This measure will provide increased child benefits to 2 million modest and low–income families.

The 1999 Budget