Canadian government to survive on modest budget

( Reuters ) - Canada's Conservative government presented a lean budget on Tuesday, designed to steer a steady course through tough economic times, but offering enough treats to prevent the opposition from voting it out of office.

The main opposition Liberal Party, trailing the Conservatives in many polls, quickly signaled it would back the budget even though they considered it a shallow document.

"In the circumstances, I don't see enough in this budget that would justify that we precipitate an election that Canadians do not want for now," Liberal leader Stephane Dion said outside the House of Commons, while Finance Minister Jim Flaherty was still delivering his speech.

In a move to encourage saving, Ottawa delivered an unexpected tax-free shelter for Canadians to squirrel away their extra cash, including capital gains.

Foreseeing shrinking revenue this year amid a possible U.S. recession, and also because of its own past tax reductions, Flaherty stuck to his pledge to pay down C$10 billion ($10.2 billion) in debt in 2007-08 and still balance the budget for the 11th consecutive year.

But he broke away from a commitment to reduce debt by at least C$3 billion in subsequent years, opting to inject some stimulus into the economy instead.

"Our government is taking the path that requires focus, prudence and discipline - it's an economic plan rooted in reality," Flaherty told Parliament. "Instead of a year-end spending spree, we are giving Canadians a direct stake in - and a direct benefit from - debt reduction."

There were no blockbuster tax cuts in the plan, with Flaherty saying he had already done the heavy lifting on that front with a C$60 billion tax package last October.

The Conservatives under Prime Minister Stephen Harper, elected in January 2006, have a minority of seats in the House of Commons and need the support of at least one of the three opposition parties to pass legislation.

The separatist Bloc Quebecois and the left-leaning New Democratic Party both said they would vote against the budget, but the Liberal support keeps the government in power, possibly until this autumn at least.

Gleeful Conservatives privately suggested that Liberals were abdicating their role of opposition to the smaller New Democratic Party.

Publicly, Transport Minister Lawrence Cannon told reporters: "The Liberals must have deemed that this is the kind of budget that Canadians need. I'm pleased that he's supporting it."

The hallmark measure of the 2008-09 spending plan - and an inexpensive one to start with - is a tax-free savings account, which would make it easier for people to put away up to C$5,000 of their savings every year, tax-free.

Taking a page from similar schemes in the United States and Britain, Flaherty said Canadians would be able to put their money into a registered account and withdraw from it at any time to pay for expenses such as a new car or starting a business, without paying tax on interest or capital gains.

"Going into this budget it was about managing expectations and talking about prudence and frugality. The cornerstone measure coming out of this (budget) is the new savings account, which is all about trying to spur savings," said Pascal Gauthier, economist at TD Bank Financial Group.

The Conservatives' promise in the last election campaign to defer the tax on capital gains for those who reinvest their assets remains outstanding.

Expectations were high that Flaherty would come through with a three-year extension of a temporary measure allowing manufacturers to write off investments in machinery and equipment over two years, or at a rate of 50 percent a year.

But his budget disappointed industry players with a one-year extension of the 50 percent rate followed by declining rates in the following two years.

"(The budget) doesn't mean very much at all for the most innovative sector of the economy, the most competitive sector of the economy, and the sector most at risk," said Jayson Myers, president of the Canadian Manufacturers and Exporters.

As Canada's economy is dragged down by slowing exports to the United States and tax cuts take effect, fiscal revenues are projected to decline to 15.3 percent of gross domestic product in 2008-09 from 16 percent in 2007-08 percent.

Ottawa's debt payment will dip to C$2.3 billion in 2008-09 and to only C$1.3 billion the following year. That contradicts the government's promise - as recently as last fall - to pay down "at least" C$3 billion in debt every year.

However, the total debt paydown over the three-year period from 2007 to 2010 is C$13.8 billion, or an annual average of about C$4.6 billion. The government returns to its promise of a C$3 billion debt reduction in 2010-11.

Official representative of Presidential Administration of Azerbaijan thanks Israel for medical assistance - Israel HaYom
Official representative of Presidential Administration of Azerbaijan thanks Israel for medical assistance - Israel HaYom
Bulk of Jan.2021 loans to electric energy sector in Azerbaijan issued in foreign currency
Bulk of Jan.2021 loans to electric energy sector in Azerbaijan issued in foreign currency
Azerbaijan confirms 71 more COVID-19 recoveries
Azerbaijan confirms 71 more COVID-19 recoveries
Loading Bars
Finnish researchers develop nasal spray COVID-19 vaccine
Germany starts easing COVID-19 lockdown
Conversations ongoing on potential projects between Turkmenistan, UK
Exports to Iraq via Mehran crossing top $460m
Turkey passes 10 million mark in COVID-19 vaccinations
Georgian parliamentary committees to hear report on HPP construction
Official representative of Presidential Administration of Azerbaijan thanks Israel for medical assistance - Israel HaYom
UN chief urges countries to adopt special measures, quotas to advance women's equal participation
UK records another 4,712 coronavirus cases
Supreme Court rejects final Trump election challenge
India may start full operations at Chabahar port by May end
Iran profits from gas transmission development
Georgia 1st among best destinations for vaccinated travellers in 2021
Erdogan, Johnson discuss bilateral developments over phone
Electricity consumption in February amounted to 1.6 bln kWh in Kyrgyzstan
US coronavirus cases exceed 29 mln
Yellen says Biden COVID bill to fuel 'very strong' U.S. recovery
Iran's budget deficit decreases
Iran's Energy Exchange announces products to be on sale on March 9
Africa's confirmed COVID-19 cases pass 3.96 mln: Africa CDC
Syria's President Bashar al-Assad tests positive for Covid-19
Employment in Iran's industrial sector increases
Bulk of Jan.2021 loans to electric energy sector in Azerbaijan issued in foreign currency
Azerbaijan confirms 71 more COVID-19 recoveries
Loading-unloading of cargo in ports of Iran's Gilan Province expands
Iran's power consumption reduced by Omid plan
Iran to inaugurate more projects in free economic zones
Iran has developed steel supply chain - Iranian President
Iran's Securities and Exchanges Organization talks number of investors in capital market
Iran’s Bahar Azadi gold coin price rising
Volume of dry-farming land in Iran increases
Iran's NISOC begins excavations on its territory
Iran’s South Pars Gas Company reveals production data of its refinery
Iran waits for Europeans to comply with the JCPOA - MFA
Iran to make decision whether to open schools after Nowruz holiday
Production of LPG-fueled cars in Iran's interests - Chamber of Commerce
Armenia's war crimes exposed at UN Congress
Azerbaijan sees growth in Jan.2021 transactions via clearing system for small payments
Iran boosts car manufacturing
Spanish La Vanguardia: Return to Azerbaijan's Karabakh after war
Azerbaijan’s export of ferrous metal products down
Turkmenbashi Oil Refineries opens tender for purchase of gasoline
Britain's M&S expands online business to over 100 markets
Dustbin of history - place for former Armenian president Kocharian, 'Karabakh clan' - historian
Khazar Consortium opens tender to purchase cementing unit
Turkey’s food retail chain Migros to bolster gender-equal workforce and greener stores
Iran Mercantile Exchange working to expand sale of goods
Iran reveals COVID-19 data for March 8
Modi to inaugurate Maitri Setu between India and Bangladesh on Tuesday
India's Covid Vaccine Rollout "Rescued The World": Top US Scientist
India pre-eminent partner of US in Indo-Pacific region: Blinken tells Jaishankar
Bachendri Pal to lead all women team aged above 50 in a 5 month long Himalayan expedition
Satellite set for Mar 28 launch will provide near real time images of borders, quick monitoring of natural disasters
Sikh Fighter Pilot Memorial In UK To Honour Indians Who Fought In World Wars
IMF, Georgia review agenda of bilateral cooperation
Iranian President and Irish FM discuss JCPOA
Iran reserves strategic basic goods
Iran’s Rouhani asks for release of frozen assets in Iraqi banks
Iranian parliament approves increase of salaries to aid low incomes
Iran not to allocate Nowruz gasoline quota due to COVID-19
Uzbekneftegaz establishing production of import-substituting products for industrial enterprises
Iran to obtain its funds frozen in Iraq
Georgia opens new enterprise with support of Rural Development Agency
Interest in entrepreneurship growing among women in Azerbaijan
Export of cotton from Azerbaijan greatly increases in Jan. 2021
Mubarek oil&gas production dep’t owned by Uzbekneftegaz to increase natural gas production
Uzbekistan reveals its COVID-19 data for March 8
Iran unveils number of mining facilities put into operation
Japanese businessmen visit Azerbaijan’s Guba genocide memorial complex (PHOTO)
Development of Iran's Siyahmakan oil field launched
Nearly half of non-oil sector taxes in Azerbaijan falls on mobile operator in 2020
Azerbaijan's Azercell reveals number of processed requests in 2020
Azerbaijan's Jan. 2021 imports from EU show increase
Accumulative life insurance market in Azerbaijan grows
Iran capable of building long water transfer pipelines - Iranian VP
Deliveroo launches London IPO after business surges in 2020
Iran to publish final report of the downed Ukrainian jet soon
No direct or indirect relations between Iran and US - Iranian Foreign Ministry
Approval of FATF related bills would increase Iran's export revenue - Iranian Union
Iranian medicine importers awaiting approval of FATF related conventions
Turkey records slight decrease in car exports abroad
Cement exports from Turkey to global markets grow
Azerbaijan shows footage from Zangilan's Garagoz village (VIDEO)
Turkey's revenues from export of grains, legumes to global markets up
Moscow hosts opening ceremony of another 'Gifts of Azerbaijan' stand
Turkmenistan sells diesel fuel, gasoline to number of countries
Baku celebrating International Women's Day (PHOTO)
Kazakhstan's exports to Portugal plummet amid COVID-19
Kazakhstan boosts trade turnover with Lithuania
Oil supply to exceed demand in 2022, says JP Morgan
Georgia sees decrease in COVID-19 cases
Uzbekistan's gold deposit ranks in list of world's biggest gold mines by production
Azerbaijan's digital infrastructure project to generate Digital Silk Road between Europe, C.Asia
U.S. says all options on table for a decision on Afghanistan
Growth rate of agricultural production in Turkmenistan increases
Uzbekneftegaz reveals volume of oil products manufactured in 2M2021
Azerbaijan's First VP congratulates Azerbaijani women on International Women's Day
JP Morgan reveals 2021 oil demand & supply forecasts
Boom in Iran's housing sector create new jobs for local force
JP Morgan says OPEC to boost supply in 2021
All news