Tax Cuts Should Save Canada From Recession Says PM

by Caroline Maxwell, Tax-News.com, London

10 September 2001

Speaking on CBC TV on Thursday, Canadian Prime Minister Jean Chrétien said that he was optimistic about the country's economic future, and didn't expect Canada to fall into a recession.

'The economy is more shaky than previous years,' admitted M. Chrétien, 'but at least we are doing better than many of the others because we had the wisdom to cut taxes on the first of January and to increase demand in 2001.'

He said that the recent tax cuts have put money in the pockets of Canadian citizens and helped the economy to remain robust despite falling exports and stock prices. In May, Finance Minister Paul Martin predicted a $7.2 billion surplus for the 2001-2002 fiscal year, but according to a recent report in the National Post, government sources have downgraded this figure somewhat: 'It is safe to assume that the $7.2 billion figure will be down,' an un-named government official was quoted as saying. 'It will probably be in the range of $5 billion.'

However, despite the government's buoyant mood over the state of the economy, there are concerns that the United States slowdown could drag Canada, which exports the majority of its goods to its nearest neighbour, down with it. An OECD report released last week warned of this eventuality, but stated that Canada is in a better position to cope with an international economic slowdown than previously, as a result of inflation control targets and its success in eliminating fiscal deficits.

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