The Canadian federal budget for the 2007–08 fiscal year was presented to the House of Commons of Canada by Finance MinisterJim Flaherty. Flaherty presented the 2007 budget on March 19, 2007. No income tax or GST cuts were announced but there were tax credits (of up to $310 per child) for some families with children under 18.[2] The federal budget included $14 billion in new spending and $5.7 billion in tax cuts. This was the second budget of the 39th Canadian Parliament.
Since the government held a minority, the budget needed support of at least one opposition party. On March 29, 2007, Bill C-52, the enabling legislation to implement the budget, received First Reading in the House of Commons with the support of the Bloc Québécois. The New Democratic Party and Liberal Party voted against it. The budget passed 174 to 109 in the House of Commons in first reading.[3] It would later pass the second and third readings in June.
Many politicians believe that the changes to equalization disregard the Atlantic Accord. There was speculation that some Atlantic government members would vote against the Budget, but only Bill Casey did, and was subsequently removed from Caucus.
On June 22, 2007, the Senate passed the budget with a vote of 45–21, with only liberal senators from Atlantic Canada and Saskatchewan voting against it. Conservative senator Anne Cools voted against it too, which in turn led to her removal from the Conservative caucus. The bill was given royal assent by the Governor-General, Michaëlle Jean, about two hours after the vote.[4]
The Liberals and the New Democrats announced shortly following the presentation of the budget that they would not support in its current form.
Nova Scotian politicians have criticized the new equalization plan, as it cuts back payments on the assumption that various offshore programs will result in increased revenues. Nova Scotia premier Rodney MacDonald has stated that this situation is caused by the few Nova Scotian seats in the Federal Cabinet.[8] This is expected to be a cut of approximately 5 million dollars.[9] Premier MacDonald later urged all his province's MPs to vote against the budget after a letter Flaherty that was published in a Nova Scotia newspaper. 9 of the 11 MPs voted against it in the third reading.[10] After the 2007 passed, the government started to work on a comprise with Nova Scotia to settle the dispute.[11]
Saskatchewan Premier Lorne Calvert argued that his province will receive no new money and alleged that the Conservatives were favouring Ontario and Quebec at the expense of other provinces, which MP Maurice Vellacott has disputed. Other premiers including New Brunswick's Shawn Graham, British Columbia's Gordon Campbell had some reservations.[14] However, Ontario Premier Dalton McGuinty said that the budget represented "real progress" for his province.[15][16]
Many Ontario-based and Western-Canadian columnists have supported Flaherty's budget, citing figures that indicate that the per capital income in Newfoundland and Nova Scotia has improved significantly, at the expense of Ontario, and that allowing the Maritime provinces to keep both equalization payments and resource revenues would hurt Ontario even more. [1].
House of Commons vote on the Budget Implementation Act, 2007[17]
On October 30, 2007, the Conservatives tabled an economic statement (similar to a mini-budget) and announced various tax cuts and exemptions. Overall, the government proposed a total of $60 billion in tax cuts over five years, including $14 billion in corporate tax cuts by 2012 (or a drop of 33%), a 1% drop of the GST to 5%, an increase of the basic personal tax exemption to $10,100 per year by 2009. The stated goal of the corporate tax cuts was to set Canadian corporate tax rates as the lowest in the G7, although this would require the provinces do matching tax cuts. The lowest personal tax rate will be reduced from 15.5% to 15%, effective January 1, 2007 back to the same level as when the Conservatives were elected in 2006. Economists said that with the large surpluses the federal government accumulated as well as high tax levels, there was another room for significant tax cuts.
The opposition parties criticized the mini-budget as the NDP leader Jack Layton mentioned that the budget did little for impoverished Canadians, and that big corporations such as oil companies and major banks will receive hefty tax breaks. The Liberals were critical of the GST cut as being not an efficient tax-relief but did praise the corporate tax cuts.[18] The mini-budget, a confidence motion did pass 127–76 but without support of any opposition party as the Liberals abstained from voting as they did with the Fall 2007 Throne Speech.[19]
During the Throne Speech in October 2007, Harper also addressed issues surrounding the economy because of difficulties in the manufacturing and forest sectors due to the loss of numerous jobs at several companies including the three major automakers in the United States and several small to large forest companies over the past few years. On January 10, 2008, the government announced a $1 billion relief fund for single-industry communities that were hit hard by recent closures particularly in the forest and manufacturing industries but also the fishing sector.[20]
