(January 25 – 17:20 ET) – The federal Finance department has released a set of new policy measures designed to give the provinces more tax collection flexibility. Provinces will be able to draw their income taxes on either your taxable income, or your basic federal tax.
A tax-on-income system eliminates the impact of changes to federal tax rates and credits on provincial-territorial revenues. At the same time, it maintains a common federal-provincial- taxable income base which will preserve the following benefits associated with the federal-provincial-territorial Tax Collection Agreements :
* uniformity across provinces and territories with respect to what income should be taxed by both levels of government;
* a single form for taxpayers;
* a single tax collection agency
Under the guidelines, the costs charged to provinces and territories are graduated to reflect the degree to which their taxes are harmonized with their federal counterparts, says Finance
“This is the biggest change in federal-provincial-territorial tax collection arrangements in over 30 years. It will allow the provinces and territories to pursue their own policy objectives while insulating their revenue bases from ongoing federal initiatives to reduce taxes,” says Finance.
-IE Staff