Budget 2007: Something for Everyone
By CO Staff @canadaone | March 19, 2007
With a possible spring election pending, the federal conservatives' budget has been widely viewed as the beginning of their election platform. The result is a budget that has something for everyone.
The budget has a windfall for the provinces and social programs, tax relief that will help seniors and Canadian families and even $22 billion repayment against the national debt to be paid over 2 years. In all the budget has over $20 billion in new spending and a lot of new programs.
Highlights of the big winners:
The provinces:
The provinces will receive an extra $16 billion in equalization payments to be paid out over 7 years. The provinces will also receive $2.6 billion in new healthcare funding.
The environment & social programs
The environment, which will receive an investment of $4.5 billion in environmental initiatives, while social programs will receive an infusion of $5 billion.
Tax cuts for families, seniors
Targeted tax cuts for families in the low to middle income tax bracket will be made available through a new $2000 child tax credit.
Retired couples will be able to split pension earnings for tax purposes and can hold registered retirement savings plans (RRSPs) and registered pensions until 71 instead of 69.
The $4,000 limit on annual contributions to registered education savings plans (RESPs) has been eliminated and the lifetime contribution limit increased to $50,000 from $42,000. (RESP eligibility will also be extended to include more part time studies.)
A new $550-million-per-year Working Income Tax Benefit (WITB), designed to help people over the "welfare wall", will provide up to $500 per year for individuals and $1,000 for families to reward and strengthen incentives to work.
Manufacturers big business winners
Changes to the Capital Costs Allowance (CCA) will bolster manufacturers with a new CCA incentive. From now until the end of 2008 manufacturers can completely write-off their investment in new equipment over a 2 year period. This will result in $1.3 billion in savings over a three year period. Changes will also shorten the write-off period for computer equipment and non-residential buildings.
Other impacts on business
The lifetime capital gains exemption for farmers, fishers and small business owners will be increased to $750,000 from $500,000.
A one-time $600-million payment to establish new, cost-shared savings accounts for farmers (once agreement is reached with provinces and territories) and an immediate one-time payment of $400-million to farmers to address rising costs of production.
Budget 2007 continues on last year's announcement to further reduce the general corporate income tax rate to 18.5 per cent beginning in 2011. (The 2006 budget announced that the general corporate tax rate would be reduced from 21 per cent to 19 per cent by 2010.)
The Canada Revenue Agency (CRA) will be given new resources to detect and close down tax avoidance from corporations who have not paid their 'fair share'.
New funding for skills training will continue the government's comprehensive approach where training is delivered by the provinces. This long-term support will provide $3 billion in total support by 2013–14.
An investment of $50.5 million over two years to improve the Temporary Foreign Worker Program
Long-haul truck drivers' deduction for meal expenses rises to 80 per cent from 50 per cent.
The Conservatives propose to build a "Tax Advantage for Canada" that will allow Canadian businesses to successfully compete with the best in the world.
While the Liberals and NDP have said they will not support this budget, the Bloc has said it will, which means we can expect the budget to pass in the House of Commons. The next question is whether the Harper government - or its opponents - will be looking to push for a spring election once the budget passes.
Reponses to the Budget:
The Canadian Chamber of Commerce's Budget Response
Certified General Accountants Association of Canada's (CGA-Canada) Budget Response
Related reading:
Minister Flaherty's Budget 2007 Speech
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