August 29, 2008
Archived - Minister of Finance Emphasizes Sound Canadian Fundamentals During Global Economic Uncertainty
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The Honourable Jim Flaherty, Minister of Finance, today made the following statement:
"This morning, Statistics Canada reported that real gross domestic product was up slightly in the second quarter.
"As expected, the pace of economic activity remains weak as a result of the U.S. slowdown and its impact on our export sector.
"For 2008 as a whole, I expect real GDP to increase by about 1 per cent.
"Solid growth in income and employment in the second quarter should help support economic activity going forward.
"Canada is better positioned than most to weather this period of global economic uncertainty.
"Canada’s economic fundamentals remain solid:
- Our unemployment rate remains near a 33-year low;
- Our budget is balanced and in fact there was a budgetary surplus of $1.7 billion in the month of June;
- In addition, real income has increased by more than 4 per cent at an annual rate over the first half of this year. This is income available to Canadians for consumption or investment;
- Canada’s household, business and financial sectors are strong;
- Canada’s housing market is sound and interest rates are low; and
- Core inflation is low and stable.
"We are also providing significant economic stimulus in Canada. Actions taken by our Government since 2006 will provide $21 billion in incremental tax relief—equivalent to 1.4 per cent of GDP—to Canadians and Canadian businesses this year alone, when it is needed most. This is a permanent structural tax change, unlike the temporary measures in the United States.
"In fact, federal personal income tax refunds this year were almost $200 or 14 per cent higher than last year thanks to our tax relief measures. In addition to the stimulus provided by the reductions in personal income tax and business taxes, we have other advantages with respect to the planned business tax reductions through 2012.
"Canada is the only member of the G7 with continued surpluses and a falling debt burden.
"Now we are facing some significant economic challenges. Canadians understand that Canada is not an island. This is a global phenomenon. The global economy overall is slowing.
"We are feeling the impact of global economic factors—including a struggling U.S. economy, and of course the U.S. is our largest trading partner. Some factors are:
- The U.S. housing crisis and its far-reaching economic implications;
- Record increases in the price of oil; and
- The ongoing volatility in global financial markets.
"We recognize that the key to a stronger economy is creating an environment that encourages investment and spurs further job creation.
"That’s why we have made permanent broad-based tax reductions.
"That’s also why we are investing in priorities: in post-secondary education, infrastructure and worker retraining.
"That’s also why we are creating centres of excellence in science and technology.
"We believe this is the responsible, prudent course of action. We believe in long-term initiatives that will improve Canada’s competitiveness and productivity.
"We don’t believe in short-term, band-aid solutions, and we don’t believe in irresponsible massive deficit spending.
"During times of global economic uncertainty, we definitely don’t believe in imposing punishing new taxes on Canadians and Canadian industries.
"Rather, we will continue with our program of lowering taxes, reducing debt and spending on the priorities of Canadians. This will keep our fundamentally strong economy in good shape and ready to weather economic challenges."
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
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