Tax Cuts Save $30 billion in Canada
May 28, 2014 Taxation in Canada
OTTAWA – Canada has implemented tax cuts worth tens of billions of dollars over the last decade, but the reductions may be forcing the country into a budgetary deficit.
Over the last 9 years the government of Canada has instituted a number of tax cuts and allowance hikes, which now save each and every taxpayer nearly CAD 1 000 in tax payments per year, according to information in a new report released on May 27th by the watchdog Parliamentary Budget Officer (PBO).
According to the findings of the PBO’s research, cumulatively all of the tax cuts, credits, and allowances implemented since 2005 have the effect of reducing tax revenues by nearly CAD 17.1 billion per year, while the reductions to the rate of GST reduce tax revenues by CAD 13.3 billion per annum.
All of the implemented tax cuts primarily benefit low and middle-income individual and households, especially those earning between CAD 12 20 and CAD 23 000.
The fiscal impact of the tax cuts far outweighs the effect that recent spending cuts will have on the government’s coffers this year, as the reduction of government expenditures is only equivalent to CAD 12.5 billion.
The experts of the PBO pointed out that the financial burden of the tax cuts is very heavy, and the country could already have attained a budget surplus had the reductions never been instated.
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