Canadian Govt. aims to end Net-debt

Ottawa -- Finance Minister Jim Flaherty Thursday released the Tory economic vision aimed at eliminating the net federal debt in next 15 years, steadily cut corporate and personal taxes, and expand private-sector involvement in infrastructure financing. He called it "a matter of fairness for future generations."

The government will take on a new national objective to abolish the total government net-debt by 2021 which currently stands at $481 billion. "Those who benefited from years of overspending have an obligation to help bring it down. To do otherwise is to mortgage the future of our children and our grandchildren," said Flaherty.

As Flaherty delivered a financial update to parliament he said, “It’s time to mobilize Canadians to make a national commitment to pay off Canada's national mortgage.”

He was definite that the interest savings resulting from debt reduction would be applied on cutting personal income taxes. "This 'tax back' guarantee will give Canadians a direct stake and a direct benefit in how we manage government finances on their behalf," Flaherty said.

In the current financial year these savings are expected to sum up to C$700m and could double over the next five years.

NDP Leader Jack Layton said Mr. Flaherty's focus on tax cuts was reckless. "They're just saying they're going to pay down the mortgage incredibly fast, while neglecting to set aside money for daily living,” he said.

The objective of leaving the nation with a level of debt equal to the value of its assets will require provincial and territorial governments to maintain balanced budgets and join the plan.

Tories described its economic update as "optimistic, but realistic. It is visionary, but pragmatic.” But according to taxation and investment specialists there was little new detail in the plan.

New income tax reductions and lower taxes on savings and capital gains were among the promises made. Flaherty predicted a budget surplus pf $4.2-billion this year — $600-million higher than the $3.6-billion forecast in the May budget.

However, Flaherty admitted that Canada was vulnerable to the downturn in the US housing market; uncertainty about commodity costs and the possibility of further drop in the U.S. dollar could push up the Canadian dollar and impair exports.