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Introduction

Canada's economic and fiscal fundamentals are as solid as the Canadian Shield, yet the world economy is experiencing turbulence and increased uncertainty.

Given this global economic uncertainty, now is the time to act. Our strong fiscal position provides Canada with an opportunity that few other countries have-to make broad-based tax reductions that will strengthen our economy, stimulate investment and create more and better jobs.

The Government is taking bold new steps to build a better Canada by:

"Our Government is establishing 
a proud legacy of tax relief."

The Honourable Jim Flaherty,
Minister of Finance,
2007 Economic Statement

Recent Economic Developments and Prospects

Economic growth in Canada continues to be strong.

Private sector forecasters expect real gross domestic product growth of 2.5 per cent in 2007, 2.4 per cent in 2008 and 2.7 per cent in 2009.

However, the Government is mindful of economic challenges, such as:

Fiscal Projections

The strength of the economy over the first half of 2007 has bolstered revenue growth and the overall fiscal position of the Government.

The Government is directing higher revenues to reducing taxes and debt.

Planned debt reduction is $10 billion for 2007-08 and $3 billion in each year thereafter.

This will bring total debt reduction since 2005-06 to over $37 billion, lowering the federal debt burden by about $1,570 for every man, woman and child in Canada.

The Government's Tax Back Guarantee is ensuring that interest savings resulting from debt reduction are being returned to Canadians in the form of lower personal income taxes.

As a result of the additional debt payment, the total value of tax relief provided under the Tax Back Guarantee will rise to $2.5 billion by 2012-13.

Broad-Based Tax Reductions for Canadians

This Economic Statement provides a total of $60 billion of tax relief over this year and the next five years.

Taken together with the previous tax reductions, the Government will have reduced the overall tax burden for Canadians and businesses by almost $190 billion over this same period, bringing it to its lowest level in nearly 50 years.

Personal

About three quarters of the tax reductions will benefit individual Canadians and their families, including:

Savings from reducing the GST to 5 per cent from 7 per cent can be significant

  • A family purchasing a new $300,000 home will save $3,840 in GST.
  • A family spending $10,000 on home renovations will save $200 in GST.
  • A family spending $30,000 on a new minivan will save $600 in GST.

Business

The Government is ushering in a new era of declining business taxation in Canada by:

With these reductions, Canada's general federal corporate income tax rate will fall by one-third between 2007 and 2012, and Canada's corporate tax rate will become the lowest among the major industrialized economies.

How Can I Get More Information
on the 2007 Economic Statement?

Information is available on the Internet at www.fin.gc.ca or by phoning:

1-800-O-Canada (1-800-622-6232)

1-800-926-9105
(TTY for the speech and hearing impaired/deaf)

You can also obtain copies of this brochure and other documents from the:

Distribution Centre
Department of Finance Canada
Room P-135, West Tower
300 Laurier Avenue West
Ottawa, Ontario  K1A 0G5
Phone: 613-995-2855
Fax: 613-996-0518
E-mail: services-distribution@fin.gc.ca

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