Income-tax cut goes into effect
1% reduction meant to offset extra costs arising from HST
The vast majority of Ontarians get an income tax break starting Friday.
Effective Jan. 1, the rate drops from 6.05 per cent to 5.05 per cent for the province's lowest tax bracket — which applies to the first $37,000 of a taxpayer's income.
The changes mean anyone who earns enough to pay tax will save some money. Someone making $37,000 a year or more will keep an extra $280.
The Ontario government implemented the tax cut to try to offset the extra levies people will pay when the Harmonized Sales Tax comes into effect in July, Revenue Minister John Wilkinson said. The HST blends the PST and GST together into one amount, and will hike the price of many goods and services that previously were exempted from PST.
"We've taken great care to ensure that people of the most modest means are actually going to be in a better position," Wilkinson said.
"For middle-class people, it's a bit of a wash. In other words, they'll have personal income tax cuts on one side, and they'll see a bit more sales tax on the other. People at the upper end, overall, are going to be spending a bit more."
The Canadian Taxpayers Federation, which advocates for lower taxes, said the income-tax break hasn't changed its stance: It wants to see the HST reduced to 11 or even 10 per cent in Ontario.
"Middle-class families are still getting slammed by the HST. In B.C. and Ontario, the HST needs to be reduced by at least two percentage points," the federation's Kevin Gaudet said in a statement.