Thank you, Mr. Chairman, for the opportunity to present Bill 2, An Act to Amend the Income Tax Act, No. 2.
Bill 3 would increase personal income tax rates for higher income earners, effective July 1, 2004.
Because this income tax measure will be effective in 2004, we need to advise the federal Minister of National Revenue of our new rates before April 15th of this year so that they can be administered by the Canada Revenue Agency. In order for these changes to be implemented, this bill needs to be passed in this sitting of the Assembly.
Bill 3 would increase personal income tax rates for taxpayers with taxable income over $66,492. The rate for the third bracket, covering taxable incomes between $66,492 and $108,101, will increase by one-half a percentage point, from 11.7 percent to 12.2 percent. The rate for the highest income group, those with taxable incomes over $108,101 will increase from 13.05 percent to 14.05 percent.
This change will raise about $1 million a year from the 4,600 highest income taxpayers in the Northwest Territories.
I would like to note that there is a difference between an individual's taxable income and his or her total income. Taxable income is calculated by deducting a number of items, such as pension contributions, RRSP contributions, and the northern residents' deduction from total income. Someone with a taxable income of $66,492 would have, on average, $80,111 in total income before deductions. Someone with taxable income of $108,101 might have total income of around $124,254.
Someone with a taxable income of $68,000 will see his or her tax increase by about $7.54 a year, while someone with a taxable income of $110,000 will have an annual increase of $227.
Because this tax measure will be effective starting July 1st for source deductions, the amendment sets transitional rates for the 2004 year halfway between the old rates and the new rates. The CRA requires notification by April 15, 2004, so that payroll deduction tables can be adjusted.
Mr. Chairman, I would be pleased to answer any questions the committee has on this measure. Thank you.