Calgary Alberta Mortgage and Real Estate News

Canada should cut taxes on investment and personal income, instead of further reducing a national sales tax, and continue paring the federal debt, the International Monetary Fund said.“We welcome the government’s commitment to using interest savings from debt reduction to lower personal income taxes and to reducing effective marginal tax rates on investment, which would provide larger efficiency gains than further cuts to the goods and services tax,” the Washington-based IMF said today in an annual consultation report it prepared in December.

Prime Minister Stephen Harper’s Conservative Party was elected in January 2006 in part on a promise to lower the goods and services tax to 5 percent from 7 percent. The government cut the tax to 6 percent in July. Harper promised in a Feb. 6 speech to introduce legislation to fund tax cuts with the money the government saves on interest as it pays down the debt.

Canada’s economic growth will slow to 2.5 percent this year from 2.8 percent in 2006, the report said. The Bank of Canada’s decision to leave its key interest rate at 4.25 percent “appears appropriate moving forward,” the report said. The central bank had raised rates at seven consecutive meetings ending in May.

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