Mr. Speaker, I am pleased to rise in the House today to speak to the motion raised by the official opposition. I am grateful for this opportunity because it provides me with the chance to remind members from all parties, and indeed all Canadians, about several of the extraordinary measures that our government has taken in recent years to reduce the tax burden faced by our citizens from coast to coast.
Let me be clear. Our government has always recognized the need to reduce the tax burden on Canadians and their families. This is because we have always understood that ensuring that our tax system is fair and competitive plays an important role in building a 21st century economy while also strengthening our social foundations. With the elimination of the federal deficit in 1997, the government provided tax relief in both the 1998 and 1999 budgets. In 2000 the government unveiled the most ambitious and far-reaching tax cutting effort ever launched in Canadian history, the five year tax reduction plan.
As we announced at the time of the 2000 federal budget, our government tax reduction efforts would be founded on four broad principles.
First, while a tax reduction must ultimately benefit all Canadians, it must primarily benefit those who need it the most: middle and low income earners, especially families with children. Second, broad-based tax reductions should focus initially on personal income taxes. Third, the business tax system must be internationally competitive. Finally, broad-based tax reductions should not be financed with borrowed money.
With these factors in mind and with strong economic growth underpinning a surging Canadian economy, our government set out a five year tax plan that aimed specifically at reducing Canada's personal and business tax levels by $100 billion over five years. This plan, which has provided real and significant tax relief, was initially anchored by two fundamental structural changes.
First, the plan dealt with the issues of inflation and its effects on tax rates. As all members of the House know, taxes cannot come down in earnest until they stop going up with inflation. With this in mind, we made the most significant change to Canada's tax system in more than 10 years. In the 2000 budget the government restored full indexation to the personal income tax system, effective January 1, 2000.
Second, our government did something that no government in the previous 12 years had been able to do. We lowered the actual tax rate of Canadians. Over the five year period of our tax reduction plan, we have lowered the middle tax rates from 26% to 23%. Most importantly, two-thirds of that reduction, down to 24%, came into effect on July 1, 2000.
Reindexing the tax system and lowering the tax rates have, over the past five years, provided a significant benefit for all Canadians, but our government has gone further. We have increased the amounts Canadians can earn tax free to $8,000 and we have raised the income tax levels at which middle and upper tax rate begin to apply to $35,000 and $75,000 respectively.
They are important structural changes that have occurred in Canada's tax system. They have benefited millions of Canadians and have helped contribute to a higher quality of life for our citizens. Some of the most important and in many ways the most significant changes we have made directly relate to the support we have provided to Canadian families through our reform of the tax system.
I hardly need to remind my hon. colleagues that the cost of raising children is a significant expense. Ask any parent about the price of new shoes or snowsuits. Ask any parent whose child plays sports or takes music lessons. Ask any parent trying to save for their children's education.
The purpose of the Canada child tax benefit, CCTB, is to help with these costs. When we asked Canadians about what we would do to help them provide their children with the best possible start in life, one of the key issues they raised with us was the need to ensure that our tax system provided support for low and modest income families. We listened and, more importantly, we took action.
In budget 2000, we increased the maximum amount a family could receive under the Canada child tax benefit for its first child to $1,975, but we did not stop there. In fact, we announced a further increase in July 2001 to $2,265. In subsequent budgets we continued to raise the maximum and in the most recent year, 2004, it stood at $2,719. By the time the current round of mandated increases is over in 2007, the maximum CCTB benefit will stand at $3,243. That is more than double the $1,520 level in 1996. That is a clear example of our commitment to provide significant and sustained tax relief to Canadian families.
Canadians have also benefited from the significant reduction in employment insurance rates over the past decade. Each and every year for the past 11 years the government has lowered EI rates, which have fallen from their peak of $3.07 in 1994 to the current level of $1.95. As a result of these rate reductions, employers and employees will pay $10.5 billion less in premiums in 2005 than they would have paid under the 1994 rate.
I could go on about other measures the government has taken to provide support to Canadian families. I could speak about the substantial support it provides to persons with disabilities through the disability tax credit and the medical expenses tax credit. I could point to other efforts to help families provide funding for their children's post-secondary education through the establishment of the Canada education savings grant and the Canada learning bond. I could speak of the support that we have provided to small business owners and entrepreneurs, many of whom are operating family run businesses to help them achieve success. Instead, I will conclude my remarks with some facts for my colleagues.
First, the five year tax reduction plan represents the largest tax cuts in Canadian history. Second, three-quarters of the benefits from this plan are flowing to individuals, with most of the tax relief going to low and modest income Canadians. Indeed, in the current fiscal year, the tax reduction plan has lowered federal personal income tax by 21% on average and 27% for families with children.
Make no mistake about it. These measures have translated into real benefits for Canadians from all walks of life. For example, a typical single parent with one child and an income of $25,000 in 2004 would have received an additional $1,139 in annual net federal benefits compared to what would have happened if the tax reduction plan had not been in place. A typical single income family of four earning $40,000 in 2004 now pays $2,003 less in annual net federal tax. These are real tangible savings and they are making a difference in the lives of millions of Canadians and their children.
Given the government's strong commitment to providing support for low and modest income Canadians and their families, I will not be supporting the opposition motion and urge all of my colleagues to join me.