Tax breaks for all ages
OTTAWA — Canadians will receive extra tax relief on baby clothes, adoption expenses and sporting equipment as part of new measures announced in Thursday’s budget, but smokers will face a substantial hike in levies on manufactured tobacco for rolled cigarettes.
Finance Minister Jim Flaherty delivered a 2013-14 federal budget with very little new spending — but the government offered up a few targeted goodies for taxpayers of all ages.
As of April 1, the federal government will eliminate all tariffs on baby clothing and sports and athletic equipment (such as ice skates, hockey equipment, skis and snowboards, golf clubs and exercise equipment) to reduce the gap in retail prices that Canadians pay compared to U.S. consumers.
The current tariff rates, to be eliminated April 1, range between 2.5 per cent to 20 per cent on the various goods. The measure is expected to cost the government $76 million annually.
“We’ll see if we actually see a reduction in prices, (and) we see the tariff savings flow through to Canadian consumers,” Flaherty told reporters Thursday. “So this is a test case for us.”
The move comes after the Senate finance committee examined the price discrepancies between products in Canada and the United States, and identified tariffs as a possible factor.
Some smokers will face a significant tax hike.
The Conservative government will nearly double the excise duty on manufactured tobacco (such as chewing tobacco or fine-cut tobacco used in roll-yourown cigarettes) to $21.25 per 200 grams from the current $11.57 per 200 grams.
The government says the measure, effective after budget day, is necessary to remove favourable tax treatment on manufactured tobacco, compared to the $17 excise duty for a carton of 200 cigarettes.
The federal government will also expand the adoption expense tax credit to further encourage Canadians to adopt some of the 30,000 children in the care of child welfare agencies across Canada. Fees for a provincially required home study and mandatory adoption courses will now be eligible for the 15-per-cent non-refundable tax credit (up to a maximum $11,669 in expenses per child for 2013).
Gregory Thomas, federal director of the Canadian Taxpayers Federation, said he would much rather see across-the-board tax cuts for all Canadians.
However, the government is limited from offering bigticket tax items because of its focus on eliminating the deficit by 2015-16, Thomas said.