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Finance Minister Jim Flaherty, House of Commons photo
Finance Minister Jim Flaherty, House of Commons photo

Canadian federal budget proposes cuts and changes

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Canada's Finance minister Jim Flaherty unveiled the federal government's budget for 2012 in Ottawa yesterday afternoon. Although overall cuts were less than expected, the government announced plans to reduce spending by $5.2 billion per year over the next three years, and eliminate just over nineteen thousand public sector jobs. One-third of those job reductions are expected to occur in the Ottawa-Gatineau area.

The proposed budget also includes phased changes in eligibility for old age benefits, higher tax exemptions for shopping outside of Canada and elimination of the humble penny. Lucy Martin has more.

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This budget is part of Prime Minister Stephen Harper's stated goal to eliminate the current $21 billion federal deficit by 2015. And, with a safe majority of seats in Parliament, the ruling Conservative Party no longer needs to compromise to legislate.

Many, but not all, of the public-sector reductions would come through attrition.

Beginning in 2023, Canada's general Old Age Security program would raise benefit eligibility from age 65 to 67, with no change for those born before April of 1958.

Departments facing cuts include: National Defense, Finance, the Privy Council Office,Transport Canada and the Treasury Board. The CBC, which is largely tax-funded, is facing a phased-in cut of 10%.

U.S. retailers should be excited by proposals that would permit Canadians to bring back purchases up to $200 tax and duty-free for trips lasting over 24 hours. That's a big jump from the current limit of $50. For trips over 48 hours exemptions would double, to $800.

Because pennies cost more than they are worth, the mint plans to stop making new ones. Old pennies would still circulate, but would eventually fade away. Prices would be rounded to the nearest nickel. Finance Minister Jim Flaherty suggested donating stockpiled pennies to charity.

The NDP is the official opposition party and Montreal-area Member of Parliament Thomas Mulcair became that party's new leader less than a week ago. Mulcair charged that this budget delivers reckless cuts that ignore growing inequality.

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