The Conservative government will announce tax cuts for small business in Tuesday’s federal budget as part of an effort to shore up a key constituency ahead of the fall election.
And seniors will not be forced to withdraw as much money annually from their Registered Retirement Income Funds, a budget move that is meant to address concerns that existing rules put them at risk of outliving their savings. The new RRIF formula will reduce the required minimum withdrawal by about 30% in the first year and smaller amounts in subsequent years.
With an election scheduled for October, Ottawa is moving ahead with a tax-cut-heavy plan aimed at winning over key segments of the population, including small-business owners, seniors and families raising children.
At the same time, all of the budget measures have been massaged to fit within the central promise of a return to balanced budgets, meaning some announcements will effectively be campaign promises that are contingent on a Conservative election victory. Allocating future surpluses will leave the opposition parties with little room to promise an alternative without undoing Tory tax cuts.
Finance Minister Joe Oliver will deliver the budget Tuesday after initially delaying its release for weeks in order to assess the rapidly changing economic landscape resulting from lower oil prices.
Since first forming a government in 2006, the Conservatives have already slashed the corporate tax rate from 21% to 15%. But the tax rate for small businesses – measured as a company with less than $500,000 in taxable income – has only had one reduction, from 12% to 11% in 2008.
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