NEW TAX CUTS FOR BRITISH COLUMBIANS BEGINNING JULY 1

VICTORIA – Starting tomorrow, British Columbians will pay less income tax thanks to tax cuts made possible by the revenue-neutral carbon tax, announced Finance Minister Colin Hansen. By law, government must show how every dollar generated by the carbon tax will be returned to British Columbians through lower taxes. Over the next three years, the government will reduce personal and corporate income taxes by more than $1.8 billion, the same amount estimated to be raised through the revenue-neutral carbon tax. “We are the first jurisdiction in North America to implement a revenue-neutral carbon tax, and by 2009 the planned income tax reductions will give the majority of British Columbians the lowest personal income taxes in Canada,” said Hansen. “The introduction of the carbon tax has a number of benefits for B.C. residents that include both more money in their pockets and a greener future.” The revenue-neutral carbon tax allows British Columbia to reduce taxes for individuals, families and businesses. Added to the government’s tax reductions since 2001, the changes in Balanced Budget 2008 will give British Columbians, by 2009, the lowest personal taxes in Canada on incomes up to $111,000.

Effective July 1, 2008, personal and corporate income tax changes include:
· Personal income taxes are reduced by 2 per cent for 2008. However, most people will notice a four per cent reduction in provincial tax on their paycheques as the rate cut is applicable to the entire year, but being condensed into six months;
· General corporate income tax rates fall to 11 per cent from 12 per cent; and,
· Small business tax rates drop to 3.5 per cent from 4.5 per cent.

In addition to the income tax cuts, the new Low Income Climate Action Tax Credit will provide lower-income individuals and families with an annual payment of $100 per adult and $30 per child in 2008 or $100 for the first child in a single parent family. In 2009, the tax credit will rise to $105 per adult and $31.50 per child and will be reviewed annually to ensure it continues to help low-income British Columbians offset the cost of the carbon tax. The tax credit will be paid quarterly along with the federal GST payment.