Expected to save Newfoundlanders and Labradorians about $37 million annually
Effective Thursday, the provincial personal income tax rate on income between $31,278 and $62,556 will be lowered to 12.5 per cent (from 12.8 per cent).
The tax rate for the top income tax bracket (over $62,556) will decrease to 13.3 per cent (from 15.5 per cent).
According to a news release, the changes will make Newfoundland and Labrador's top marginal rate among the lowest in the country. It also complements tax relief brought in by the provincial government in previous years targeting low-income earners, such as the Low Income Tax Reduction.
The province already has the lowest tax rate on the first income bracket in Atlantic Canada.
Also on July 1, the Dividend Tax Credit rate on eligible dividends will increase to 11 per cent, making the province more competitive in this area and encouraging investment activity.
The news release states these changes are among several measures introduced in Budget 2010, including tax relief for seniors and lowering the small business corporate income tax rate by one per cent, which came into place earlier this year.
Also on Thursday, the provincial minimum wage will increase by 50 cents to $10 per hour - an increase that represents the final step of its 2007 Blueprint commitment of achieving a minimum wage of $10 per hour by 2010.
"This increase is another way the Williams Government is improving the quality of life of Newfoundlanders and Labradorians and making our province more competitive with respect to attracting talent," said Susan Sullivan, Minister of Human Resources, Labour and Employment.
"With this 50 cent increase, Newfoundland and Labrador will have the second highest provincial minimum wage in the country, behind Ontario."
Other tax changes include: For seniors, a non-refundable Age Amount tax credit for individuals aged 65 years or older increases from $3,681 to $5,000. The income level at which taxpayers become eligible for the credit moves from $51,940 to $60,733, meaning that more seniors now qualify to receive it. Those who claim the Age Amount will receive a benefit of up to $102 through a reduction in their provincial tax payable.
As well, the maximum amount under the Low-Income Seniors' Benefit Program, which is paid out in October, will increase from $803 to $900, providing up to an additional $97 for eligible seniors. The Low-Income Seniors' Benefit is available to seniors with a family net income under $33,884. Approximately 42,500 seniors in Newfoundland and Labrador will be eligible for this increase.
"Budget 2010 taxation measures are directly benefiting our province's seniors, our small businesses and entrepreneurs, and everyday Newfoundlanders and Labradorians," said Finance Minister Tom Marshall. "As a result of our action to improve tax competitiveness, Newfoundland and Labrador is being recognized increasingly as an attractive location to live, work, and do business."