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Canada records $13.8B budget surplus Politics Watch® News Services
September 27, 2007, updated 2:30 p.m.

Prime Minister Stephen Harper and Finance Minister Jim Flaherty . 

OTTAWA  —  The Conservative government announced Thursday that it posted a $13.8 billion budget surplus for the last fiscal year. 

Prime Minister Stephen Harper, who in opposition characterized surpluses as over taxation, made the announcement along with Finance Minister Jim Flaherty in Toronto. 

This year's surplus is substantially larger than the $9.2 billion surplus that was forecasted. 

The government will direct the entire surplus to pay down Canada's national debt. 

The resulting $725 million in interest savings will be returned to Canadians in the form of tax cuts under a "tax back" policy introduced by Flaherty last year.  

Canada's national debt now stands at $467.3 billion down from its peak of 
$562.9 billion in 1996-97. 

Using the entire surplus to pay down debt differs from the approach of the previous Liberal government, which would often use some of the surplus for new government spending. 

"We're not going to use this extra savings the way the previous government did," Harper told reporters.

The prime minister said his government would stay the course and continue to hold the line on government spending and use any future surpluses to pay down debt. 

Flaherty said the large surplus "confirms Canada's economy has posted another strong year."

However, the finance minister said the economy continued to face "challenges," such as the impact Canada's strong dollar is having on the manufacturing sector. 

While Harper and Flaherty described the large surplus as good news, the Canadian Taxpayers Federation criticized the Conservatives for embracing large budget surpluses now that they are in government. 

"Ottawa continues to take too much money out of the pockets of Canadian families and businesses," John Williamson, federal director of the Canadian Taxpayers Federation, told PoliticsWatch in an interview. 

"I tend to think Canadians increasingly view these massive surpluses as an over taxation and recognize they are being gouged." 

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