Canada's New Government Provides Real Tax Relief for Canadians

In the 2006 budget, a $26 billion tax relief package was included. The article tells us that the Minister of Finance, Jim Flaherty, announced it was given Royal Assent (An okay from the Governor General after the bill has gone through the cabinet and what other legislation there is). The budget bill is called Bill C-28.

According to Flaherty, the new government has reduced the tax burden on Canadians but the taxes are still too high. As they develop the Budget for 2007, they’re in the process of providing more tax relief for Canadians.

There are several tax reductions listed at the source. This includes a 1% reduction in the goods and services tax rate that took place after July, 2006 and the children’s fitness tax credit that started at the beginning of this year.

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Relationship to Ch. 4 – Government in Canada

I find that it is rather nice that there are tax reliefs for us Canadians, but is it really a good thing? The chapter refers to a few factors that contribute to government spending. Part of the political process is to promise certain things, and most likely, one of those promises was to lower taxes. As of November 28, 2006, the government reported that they had “reduced the debt burden to the lowest level in quarter century”. They had eliminated the $13.2 billion in debt by spending 15 cents of every revenue dollar on the interest for public debt. Canada's net debt burden is the lowest in the G8. The G8 is the Group of Eight, an international forum for Canada, France, Germany, Italy, Japan, Russia, The United Kingdom and the United States.

With the reductions, is it possible to continue paying off the debt and saying that these levels of debt reduction will remain the same? I can only hope that the government has calculated everything properly because to increase taxes and any plans to revoke the newer reliefs in the future wouldn't fall too well with people.

Also, the tax relief only benefits certain groups most of the time. Perhaps a personal income reduction would have put too large of a dent in the government's revenue? According to Wagner's law of increasing state activity, the government's spending will increase at a faster rate than the output of goods and services. Therefore, it will be pretty hard to sustain the level that Canada has been at with paying off its debts.