Perhaps the most significant new tax measure announced by Flaherty was the proposal to introduce Tax-free Savings Accounts (TFSAs) in 2009. These will allow all Canadian residents over the age of 18 to contribute up to CAD5,000 tax-free annually.

According to Flaherty, the creation of TFSAs represents "the most important federally driven personal finance innovation since the introduction of the Registered Retirement Savings Plan (RRSP)".

“The Tax-Free Savings Account is the first of its kind in Canadian history,” he noted. “It will provide all Canadians with a powerful incentive to save. An RRSP is primarily intended for retirement, but the Tax-Free Savings Account is like an RRSP for everything else in your life.”

Most of the tax cut measures that were given effect by Tuesday's budget speech had already been announced by Flaherty. These included the elimination of the corporate surtax, a reduction in the general corporate tax rate to 19.5% from 21%, and the reduction of small business tax rate to 11% from 12%. The rate of GST falls an additional 1% to 5%.

As a result of prior announcements, the corporate tax rate is due to fall to 19% in 2009, 18% in 2010, 16.5% in 2011, and 15% in 2012.

Other improvements to the tax system for business and investors included:

• Enhancements to the scientific research and experimental development (SR&ED) tax incentive program through an increase in the expenditure limit from CAD2 million to CAD3 million, and an increase in the upper limit for the taxable capital phase-out range from CAD15 million to CAD50 million. The upper limit of the taxable income phase-out range will also be increased, from CAD600,000 to CAD700,000. These changes will be generally applicable for taxation years that end on or after February 26, 2008.
• A continuation of the government's commitment to reduce the paper burden on Canadian companies by 20%.
• Measures to reduce the tax compliance burden for businesses, investors, employees, and self-employed individuals.
• An extension of the capital cost allowance (CCA) system for investment in machinery and equipment in the manufacturing and processing sector for three additional years. This will include a one-year extension of the 50% straight-line accelerated CCA treatment, followed by a two-year period during which the accelerated treatment will be provided on a declining basis.
• Streamlining tax-withholding and return-filing rules to enhance the cross-border business and investment environment by: exempting dispositions by non-residents of treaty-protected property from the withholding requirements; ensuring that a person who purchases property from a non-resident is not liable for the withholding tax in certain circumstances; eliminating the need for a non-resident to file a Canadian income tax return in certain circumstances where no Canadian tax is payable.
• Exempting from tax the capital gain arising on the exchange of certain exchangeable securities, where the securities acquired on the exchange are themselves eligible for a capital gains exemption and are donated to a registered charity within 30 days of the exchange.

Flaherty also announced that Canadians will see CAD2.9 billion in retroactive personal tax relief that was announced last year. The government debt will also be reduced by CAD10.2 billion, taking to CAD37 billion the total that the Conservative government claims to have reduced the federal debt by since taking office.