Wednesday, 19 December 2007

Business tax reductions by the Ontario government

In its 2007 Economic Outlook and Fiscal Review released on December 13, 2007, the government of Ontario proposed $1.1 billion in corporate tax reductions over the next three years. The reductions are intended to support manufacturers and other sectors and include the following measures:
  1. Elimination of the Capital Tax on January 1, 2008, for corporations primarily engaged in manufacturing and resource activities;
  2. A 21% Capital Tax rate cut for all businesses retroactive to January 1, 2007, on the way to its elimination in 2010; and
  3. Increase in the small business deduction threshold from $400,000 to $500,000, retroactive to January 1, 2007.
Looks like some positive news in here for the Ontario economy, which lately suffers from the strong loonie and lower U.S. demand for Ontario products. Although the selective-incentive approach is still used here, I think that these measures are much better than largely populist and spending-oriented PST reductions and sector-oriented subsidies. How about also doing something on the individual consumer/saver side and cutting the provincial PIT rate by a percentage point or more, at least for the lowest tax bracket? That would be nice.

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