Alexa
  • Directory of Taiwan

Canadian government passes massive US$21b stimulus for businesses

Finance minister Flaherty delivers budget to help prop-up country's sluggish economy

Canadian government passes massive US$21b stimulus for businesses

Finance Minister Jim Flaherty delivered a "prudent" budget Tuesday, touting a 21-billion-dollar stimulus to prop up Canada's slowing economy and avoiding snap elections.
But in a sweeping turnaround, the Conservative government ended its tax-slashing spree of years past as fears of a global economic slowdown led by the U.S. are beginning to firm.
"The budget is balanced," Flaherty heralded in a speech to parliament at its unveiling.
Indeed, Canada is the envy of G-7 nations having posted now its 11th budget surplus in the past 11 years, he said previously.
Canada's national debt will be reduced by US$10.2 billion this year, bringing total debt reduction since the Conservatives took office in January 2006 to US$37 billion, says the budget document.
Over the next two years, it is projected to be further reduced by US$2.3 billion and US$1.3 billion, respectively, as budget surpluses shrink.
The federal tax burden, measured by total revenues as a share of the economy, is projected to decline to 15.3 percent in 2009-2010 - the lowest level in nearly 50 years.
Unemployment is currently at a 33-year low, with over 400,000 new jobs created since 2006.
But Flaherty also cited volatility in global financial markets, a slowing U.S. economy, and struggling forestry and manufacturing sectors at home that will mean the Canadian economy "will grow more slowly over the next two years."
"Canada has had a strong year and we are well positioned to weather any sudden economic storms," he said.
However, "there are challenges on the horizon. We are seeing increased global uncertainty." As a result, "Monday's budget is prudent, disciplined and realistic," he said.
Total government revenues are projected to be US$241.9 billion in fiscal 2008-2009, while total expenses are likely to be US$239.6 billion.
The federal debt, meanwhile, will fall to US$454.8 billion. And the federal debt-to-gross domestic product ratio will drop to 28.7 percent, down from almost 70 percent a decade ago.
In October, the government delivered US$60 billion in tax cuts over five years in a mini-budget.
The US$21-billion stimulus package now heralded by Flaherty is made up mostly of previously announced cuts in personal, corporate and consumption taxes since 2006 that will be felt by Canadians only this year when they fill out their tax forms.
Actual new government spending amounts to only US$1.5 billion this year, and there are no new tax cuts.
Of this spending, a modest US$100 million was earmarked for towns and sectors facing an economic downturn, as well as US$150 million to rebuild roads, bridges, water systems, public transit and international gateways.
Over seven years since 2006, infrastructure spending would top US$33 billion, amounting to the "largest single federal investment in public infrastructure since World War II," said Flaherty.
Meanwhile, Canadians will be urged to save more with a new US$5,000 tax free savings accounts.
Twenty-two million dollars will go to support immigration processing over two years to improve its "responsiveness" and "better align it with our labor market needs."
Some US$400 million will be used to hire 2,500 new police officers nationally.
And US$250 million has been set aside to help launch carbon capture and storage projects; US$66 million to kickstart a greenhouse gas emissions-trading system in Canada; US$21 million to bolster enforcement of environmental laws; and US$13 million for cleaner car fuel research.
A series of parliamentary budget ballots will be held starting at the end of week.
If all three opposition parties voted against it, the minority Conservative government would fall and snap elections would follow in April.


Updated : 2021-06-24 08:14 GMT+08:00