-- CTF Lays Out $18.8 Billion in Tax Cut and Debt Reduction Priorities --

OTTAWA: The Canadian Taxpayers Federation (CTF) today announced several tax cut and debt reduction measures that it would like to see included in this fall's enhanced Economic and Fiscal Update (or mini-budget), widely expected to be tabled in Ottawa on October 18th.

"With all the speculation surrounding a fall election, the normal pre-budget consultation process has been short-circuited, but the Minister still deserves to hear from Canadians," stated CTF federal director Walter Robinson. "Minister Martin turned a very important page for taxpayers in Budget 2000. Now is the time to accelerate and expand his $58 billion, five-year tax cut plan. He has the fiscal room to do so and is morally obliged to act."

"Once again, our priorities are tax relief for all Canadians, implementation of a legislated schedule of debt reduction, acceleration of alternate service delivery across the public service and spending cuts to non-priorities areas like corporate welfare and the regional economic development agencies," noted Robinson. Mr. Robinson encouraged reporters and Canadians to view previous CTF pre-budget submissions (1998 and 1998 editions) for detailed options for across-the-board government spending reductions. Both submissions can be found at www.taxpayer.com.

Debt Reduction

The CTF proposed that the federal government adopt a legislated approach to debt reduction. The CTF Debt Freedom Plan is comprised of three elements.

Allotment of 9% of PIT tax collections each year to debt reduction.
Maintenance of the $3 billion contingency reserve approach.
Allocation of all surplus revenues in each fiscal year to debt reduction.
"At a minimum, our plan would ensure that a minimum $7.2 billion each year is allocated toward debt plus $3 billion from the contingency reserve," added Robinson. "Given projected economic growth, Ottawa could easily be putting $10 billion each and every year toward debt reduction thereby completely paying down our $565 billion debt before the middle of the century. What a legacy to leave our children."

"It is time to admit that our national debt represents nothing more than intergenerational tax evasion. Tax evasion is immoral and criminal. Adoption of our plan would right this wrong," stressed Robinson.

Tax Relief

"We need to give credit to all politicians who have finally figured out that government surpluses truly represent over-taxation. Giving it back is not only the politically expedient thing to do, more importantly, it is the right thing to do," said Robinson. "And it is time for Ottawa to dramatically build on its foundation measures from Budget 2000 and move personal income tax relief right up the income scale."

The CTF outlined the following measures as tax relief priorities:

Increase the Basic Personal Exemption (BPE)

Over the next three years, the federal government should increase the BPE and related spousal exemptions from its level of $7,231 to $10,000. The magnitude of revenue impact of this increase is estimated to be $8.3 billion or an annual impact of $2.78 billion.

Reduce all Marginal Rates

Over the next three years, the federal government should reduce all marginal tax rates across the board by one percentage point each year. This would effectively reduce rates from their current levels of 17%, 24% and 29% to 14%, 21% and 26%. The magnitude of revenue impact of this decrease is estimated to be $11.2 billion or an annual impact of $3.73 billion.

Eliminate the Remaining 5% Federal Surtax

The federal government should eliminate the remaining 5% high-income surtax applicable to income earners of $85,000 or above. The magnitude of revenue impact of this decrease is estimated to be no more than $550 million.

Further Reduce the Capital Gains Inclusion Rate

The federal government should outline a three-year plan to reduce the capital gains inclusion rate for individuals to 25%. The magnitude of revenue impact of this decrease is estimated to be $2 billion. By lowering the inclusion rate to 50% (from its current level of 66%) for 2001, the estimated impact is $800 million.

Cuts to Gas Taxes

The federal government should lower the federal excise tax by 1.5 cents to 8.5 cents/litre. The magnitude of revenue impact of this decrease is estimated to be $750 million.