Canadians will all enjoy some tax savings in 2007, with some benefiting much more than others.

“All taxpayers will pay less tax in the New Year,” said John Williamson, head of the Candian Taxpayers Federation (CTF), in a news release.

Under the Conservative government’s fiscal plan, families with young children and some seniors will see major savings while many other Canadians take home an extra dollar or two a week. Starting Jan. 1, parents with young children can claim tax deductions on sports equipment to go along with a childcare benefit for kids under six.

Many seniors will also enjoy a windfall from the government’s income-splitting plan that will let some couples save thousands annually.

The CTF said the 2007 tax picture varies widely from one demographic group to the next.

“In some cases (people with young children) will see five times the amount of savings as individual Canadians,”said Williamson.

“It does show you where the Conservatives are putting their focus,” Williamson said.

“For individual taxpayers without children the picture’s not nearly as sunny. The average tax savings range from $100 to $120 in 2007.”

The benefits include a small decrease in Employment Insurance premiums and a new employment credit, which will offset a modest spike in Canada Pension Plan contributions.

They will also mitigate against the increase in the lowest personal income tax rate for all taxpayers that had been set by the previous Liberal government.

The new lowest personal rate of 15.5% represents a quarter-point rise from 2006, and a half-point increase from the rate set by the Liberals in late 2005.

Williamson said that an individual earning $35,000 will see average tax savings ranging from $80 in Newfoundland to $144 for Alberta residents.

Compare that to the savings for families with two children under age 6.

In such a family with a single income-earner making $80,000, the range of savings will be from $963 in Quebec to $1,545 in Alberta, said the CTF.

A two-income family earning $80,000 with two young children will save approximately $800 in Quebec up to $940 in Alberta.

The Conservatives’ new $100-a-month (before taxes) childcare benefit replaces the previous Liberal government’s proposed $5-a-day national child care program.

As for seniors, the income-splitting plan will allow pensioners who earn much more than their spouse to download half their declared income onto their partner.

The Finance Department said the plan will see a typical senior couple with a single pension of $30,000 save $1,100 in federal taxes, a 27% tax cut.

All Canadians will continue to benefit from the 1% drop in the goods and services tax which took effect July 1. Williamson said the Tories’ GST change saves the average household between $200 and $300 per year.

The following tax changes also take effect Jan. 1:

  • a children’s fitness tax credit will cover eligible fees up to $500 for physical activity programs.
  • the small business limit – the amount of business income eligible for a reduced tax rate – rises to $400,000 from $300,000.
  • in Atlantic Canada, electricity and natural gas consumers in Nova Scotia will receive a rebate on the provincial portion of the heating sales tax. Nova Scotians who heat their homes with oil, wood, wood pellets, propane, kerosene or coal started getting the rebate on Dec. 1, 2006.