Will Ottawa Now Reduce Income Taxes?!?

Structural over-taxation results in $14.2-billion surplus in 2006/07.

by John Williamson Canadian Taxpayers Federation
Interest savings of $725-million go to future tax relief, but broad-based income tax reductions not on Conservative agenda.
OTTAWA: The Canadian Taxpayers Federation (CTF) reacted today to the announcement the federal government posted a $14.2-billion surplus in the 2006 fiscal year, considerably higher than its two earlier projections. The 2006 Budget (tabled in May, 2006) originally low-balled the surplus at $3.6-billion and the 2007 Budget (tabled March, 2007) increased that estimate to $9.2-billion. Ottawa missed its original target by almost 400% and its second estimate by more than 50%.

The surplus of $14.2-billion will be used to reduce Canada's debt, bringing it down to $467.3-billion. Today's debt reduction payment will save approximately $725-million in annual interest savings. Under the federal government's new tax-back guarantee law the savings will be used to reduce personal income taxes. To date, the Conservative government has not lowered personal income tax rates, instead it has targeted income tax relief with a number of "boutique" tax reductions that favour some, but not all taxpayers.

"Canadians prefer that governments pass surplus budgets rather than deficit budgets, but this level of surplus is ridiculous. A $14.2-billion surplus means Ottawa is over-taxing Canadians by $14.2-billion. There is no excuse left, except political rhetoric, for Ottawa not to provide personal and business tax relief," said CTF federal director John Williamson. "Annual surpluses represent over-taxation by government and the money should go back to taxpayers by way of income tax relief."

For the Record - Surprise, Surprise:

Last year, when the Conservative government reported the 2005/06 surplus was $13.2-billion, Finance Minister Jim Flaherty said, "We're going to budget much closer to the line...No more so-called surprise surpluses at the end of the fiscal year."

"The government has shot its credibility on the surplus and is budgeting like the former Liberal government," concluded Williamson. "The Conservatives downplay their ability to cut taxes, like the Liberals did. They sell massive surpluses as good news, just like the Liberals did. Canadians aren't buying it any more and they recognize they are being gouged by Ottawa."

Fiscal Outlook:

The CTF anticipates the surplus for the current fiscal year (2007/08) will again exceed $12-billion. The 2007 budget estimated it will be $3.3-billion.



For further information contact:
John Williamson, Federal Director, CTF - Ottawa
Ph: 1-613-234-6554