The Yukon government is continuing to roll out its tax cuts for businesses first announced in 2004.

The latest change will come into effect on Jan. 1. It will increase the deduction limit for small businesses to $400,000 up from the previous $300,000 deductible.

It's a follow-up on the change announced in the 2004-05 budget that saw the corporate business tax rate cut from six per cent to four per cent.

'It's providing significant resources by putting it back into the businessperson's hands, and this allows us to stimulate further the private sector economy here in Yukon,' said Premier Dennis Fentie, who also serves as the territory's Finance minister.

The small business deduction limit has been raised by 33 per cent overall.

The changes are meant to help stimulate small businesses to reinvest in their own company and the territory, said Bill Curtis, the government's director of finance.

The exact impact the change will have on the Yukon's revenues generated from taxes has yet to be determined, said Curtis. It will depend on the number of small businesses that pass the $300,000 mark and by how much, he said.

While a business bringing in net revenues that exceed $300,000 will see the savings from the deductible rise, a business not hitting the mark will not see any change, he said.

However, the overall impact of the business corporate tax schedule since 2004 is estimated to have cost the government $1.1 million in revenues, said Curtis.

The changes were phased in over a period of several years so the Yukon's budget would not experience a big impact to its revenue base all at once, said Curtis.

The changes are designed to ensure that corporations will have more disposable income they're able to circulate back into the business sector and to help develop the Yukon's economy, said Fentie.

'Any time you put more capital into the hands of the small business community, the reinvestment factor increases accordingly.

'There's a corresponding investment whether it be in hires, new business ventures, more equipment purchased to increased activity.

'The fuel that drives any economic engine, frankly, is cash flow. The more cash flow, the more the economic engine will function.'