Flaherty's wish: keep Canada out of trouble in 2008

Thu Dec 27, 2007 12:24am EST
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By Louise Egan

OTTAWA (Reuters) - Cut taxes, pay off debt and then keep your head down until the bad times blow over.

That's Canadian Finance Minister Jim Flaherty's tip on surviving an economic slump in the United States, Canada's top trade partner and the world's biggest economy.

Flaherty chopped corporate, income and sales taxes in a C$60 billion swoop in October, as well as paying down C$10 billion in debt.

In an interview with Reuters, he said that had been his contribution to protecting Canada from economic disaster, and 2008 will be about sitting out the storm billowing out from the U.S. subprime mortgage meltdown.

"I expect that next year our efforts will be concentrating on stability, staying the course, sound fiscal management," he said in the interview, which was conducted on December 18 and released on Thursday at Flaherty's request.

"No grand new tax reductions," he added.

The Conservative government does have some special help in mind for the auto and forestry industries, which Flaherty said are "disproportionately affected" by the U.S. slowdown.

Canada's economy has proven resilient to the knock-off effects from the U.S. housing slump, with growth in 2007 topping forecasts so far. The housing market has outperformed the U.S. one and consumer spending remains robust.   Continued...

<p>Canada's Finance Minister Jim Flaherty stands to speak in the House of Commons on Parliament Hill in Ottawa December 13, 2007. REUTERS/Chris Wattie</p>