Canadian Finance Minister Ralph Goodale on Monday promised to cut personal and corporate income taxes by 30 billion Canadian dollars ( about 25.2 billion US dollars) in 2005 and over the next five years.
In his mini-budget presented Monday afternoon, Goodale said Ottawa's surplus this year is expected to be 8.2 billion Canadian dollars (about 6.5 billion US dollars), nearly three times as much as it was estimated in last February's budget.
The government will return some of that surplus money to Canadians by raising the basic exemption and by trimming some federal income tax rates, Goodale said.
The basic federal exemption, currently 8,148 Canadian dollars, will jump by 500 Canadian dollars for the current tax year and another 200 Canadian dollars for the 2006 tax year.
The rate at which the first 35,000 Canadian dollars of gross income will be taxes will drop to 15 percent from 16 percent, effective in the current tax year. The rates at income between 35, 000 Canadian dollars 115,000 Canadian dollars will also drop by one per cent but not until 2010.
The federal government says that a family of four with two earners who gross 60,000 Canadian dollars a year will shave 934 Canadian dollars off their tax year.
A single parent with one child who earns 50,000 Canadian dollars a year will save 700 Canadian dollars a year.
The government says that its new tax initiatives will mean that an additional 500,000 Canadians will not pay any tax.
Goodale also brought back corporate tax cuts that he was forced to axe in order to win the support of the New Democratic Party support for his spring budget.
The corporate income tax rate will drop to 19 per cent from 21 per cent but not until 2010. The corporate surtax will be eliminated in 2008.
Goodale's economic update comes as the opposition announced it would allow the government to survive until January if Prime Minister Paul Martin's government agreed to reconvene the parliament in early January.
Earlier Monday, Martin rejected the opposition's such demand, saying an early election will destroy the government's agenda for the people.