Budget 2006: Tax Cuts, Focused Spending, Debt Paydown

CPC News Release:
02 May 2006
Minister of Finance Jim Flaherty today presented a balanced federal budget that significantly cuts taxes, focuses federal spending on priority areas and pays down debt.
The budget delivers $20 billion in tax relief over two years—that is more tax relief than the previous four budgets combined. Key tax measures include:
A one-point reduction to the GST, effective July 1, 2006.
Broad-based income tax relief.
Targeted tax measures to help Canadians with the cost of:

Tools.
Textbooks.
Transit passes.
Kids’ sports.
The budget prioritizes and focuses federal spending including:
$3.7 billion over two years for the new $1,200 Universal Child Care Benefit.
$1.5 billion more this year for agriculture.
$1.4 billion more this year for policing, border security and public safety.
$1.1 billion more over two years to rebuild the Armed Forces.

The budget is balanced and specifically commits $3 billion per year in debt paydown.
For 2005–06, the federal surplus is currently estimated at $8 billion.

With respect to restoring the fiscal balance, a commitment to address concerns over fiscal imbalance; greater certainty with respect to 2006–07 Equalization and Territorial Formula Financing payments; up to $3.3 billion in additional funding support to provinces and territories to help address short-term pressures in post-secondary education, affordable housing and public transit; and a commitment to a principle-based framework for fiscal relations, outlined in the companion document Restoring Fiscal Balance in Canada.