John Manley, Deputy Prime Minister and Minister of Finance, reaffirmed today that the 25% general corporate income tax rate is legislated to decrease to 23% as of January 1, 2003.

“With this reduction, Canada’s average federal/provincial corporate tax rate, including capital taxes, will now be below the average U.S. rate,” Minister Manley said. “This advantage will promote investment and jobs in Canada.”

The rate will fall to 21% by 2004 as part of Ottawa’s Five-Year Tax Reduction Plan announced in the 2000 federal budget. Prior to the introduction of this plan, Canada’s general corporate tax rate was 28%. By 2006, together with announced provincial tax cuts, Canada’s average corporate tax rate will be 5 percentage points below the U.S. rate.

Other tax measures in the plan to stimulate investment and innovation include a faster corporate income tax rate reduction for small business, a tax-free rollover for small business investments and a reduced inclusion rate for capital gains.

The Five-Year Tax Reduction Plan also includes cuts in personal taxes. On average, personal income taxes are being reduced by 21%. For families with children, savings under the plan amount to 27%.