Mr. Speaker, in response to part (a), the lowest personal income tax rate remained at the legislated level of 16 per cent until following the budget tabled in the House of Commons on May 2, 2006.
Budget 2006 announced a permanent reduction in the lowest personal income tax rate from 16 per cent to 15.5 per cent effective July 1, 2006. Subsequently, this reduction was legislated in C-13: an act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, Royal Assent given on June 22, 2006.
More information on budget 2006 is available at www.fin.gc.ca/budget06/bp/bptoc-eng.asp.
In response to part (b), as explained in part (a), only following the budget tabled in the House of Commons on May 2, 2006 was a reduction in the lowest personal income tax rate legislated. No revenue was generated by the measure. Indeed, as detailed in the budget 2006 document (see Table 3.6), reducing the lowest rate provided total tax relief of about $6.3 billion over the 2005-06 to 2007-08 period.
In response to part (c), the lowest personal income tax rate was reduced further to 15 per cent in the economic statement tabled in the House of Commons on October 30, 200, available at http://www.fin.gc.ca/budtoc/2007/ec07_-eng.asp.
The motivation for this reduction was clearly stated in that document (please see page 7), “Canada’s economic and fiscal fundamentals are rock solid, yet the world economy is experiencing turbulence and increased uncertainty. Given this global economic uncertainty, now is the time to act. Our strong fiscal position provides Canada with an opportunity that few other countries have—to make broad-based tax reductions that will strengthen our economy, stimulate investment and create more and better jobs”.
Subsequently, this reduction was legislated in C-28: an act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007, Royal Assent given on December 14, 2007.
A vast array of public-interest groups heralded this important reduction. For instance, the Canadian Taxpayers Federation cheered that “all taxpayers are benefitting today on the personal income tax side. This is certainly a very good announcement today, and it is an amount that is going to be felt and noticed by Canadian taxpayers." The Greater Charlottetown Area Chamber of Commerce also proclaimed, “Canadians are overtaxed and (the economic statement 2007) announcements take concrete measures to address the situation in an immediate and bold fashion. These measures are particularly welcome as global competitive pressures intensify and underscore the need for international tax competitiveness… the reduction in the lowest marginal personal income tax rate to 15 per cent will help stimulate work effort, saving and investment, all of which have a direct bearing on productivity, competitiveness and prosperity”.