OTTAWA — The federal government, awash in much higher-than-expected surpluses, is promising broad-based tax cuts and billions in new spending.

The economic and fiscal update, presented this afternoon by Finance Minister Ralph Goodale, promises to cut personal and corporate income taxes by $30 billion this year and over the next five years.

Most of Goodale's plan requires approval by the House of Commons but, because a federal election is imminent, it may fall to the next government of the day to make good on Goodale's word.

"If Parliament should ultimately defeat these measures, then whoever did so would have to take responsibility for raising taxes on Canadians," Goodale told reporters.

But regardless of who forms the next government, Ottawa's surplus this year is expected to be $8.2 billion, nearly three times as much as Goodale estimated in last February's budget.

Goodale will return some of that surplus money to Canadians by raising the basic exemption and by trimming some federal income tax rates. Details of the exemptions include:

• The basic federal exemption, currently $8,148, will jump by $500 for the current tax year and another $200 for the 2006 tax year.
• The rate at which the first $35,000 of gross income will be taxed will drop to 15 per cent from 16 per cent, effective in the current tax year.
• The rates at which income between $35,000 and $115,000 are taxed will also drop by one per cent, but not until 2010.

How this affects households

Under the changes, the federal government says that a family of four with two earners who gross $60,000 a year will shave $934 off their tax year.

Meanwhile, a single parent with one child who earns $50,000 a year will save $700 a year.

But most of the tax breaks for middle- and higher-income earners won't take effect for nearly five years.

The government says that its new tax initiatives will mean that an additional 500,000 Canadians will not pay any tax.

Corporate cuts and spending initiatives

Goodale also brought back corporate tax cuts that he was forced to axe in order to win NDP support for his spring budget.

The corporate income tax rate will drop to 19 per cent from 21 per cent -- but not until 2010. The corporate surtax will be eliminated in 2008.

There are several significant spending initiatives including:

• $2.2 billion over five years to help students attend colleges and universities.
• $200 million for scholarships and internships for science students.
• $3.5 billion over five years for workplace training.
• $1.3 billion over five years for settlement and integration services for immigrants.
• $485 million to help promote Canadian business in international markets.

The measures are designed to "make this a more productive country, which will lead to higher standards of living, more disposable income and better jobs for Canadians and a better quality of life," Goodale said.

Notably, the fiscal update was silent on any plans Goodale might have to modify the way Ottawa taxes unit holders of income trusts.

Ballooning surpluses

All of this new spending and tax relief is possible because of ballooning federal surpluses, this year and through to 2011.

Between now and then, the federal government expects to collect $54.5 billion more in revenue than it plans to spend. In each of those budget years, it has also built in a $3-billion contingency reserve so the total surplus, including contingencies, is actually more than $70 billion.

All the new spending and the contingency reserve means that the forecast surplus of $13.4 billion for 2005-06 will be reduced to $1.6 billion.

The update comes as the opposition announced it would allow the government to survive until January if Prime Minister Paul Martin's government agreed to reconvene Parliament in early January.

At that time, the opposition parties would pass a non-confidence motion, triggering an election for mid-February.

The government has rejected that option.

The opposition has said if the government did that, it would move a non-confidence motion the week of Nov. 21, setting the stage for a Jan. 9 vote.

A reporter asked the question of the document's timing in relation to the start of a possible election. Goodale said he began work on this update about six months ago and that various aspects of it have been "openly in the public domain."

The original plan was an update in mid-November and a full budget in February, he said.

"It became quite obvious that the opposition's intention was to prevent the publication of a budget in February, and therefore I felt I had an obligation to Canadians not just to provide the bare bones of statistics, but in fact to give a greater indication of how the flexibility would be used," Goodale said.

The timing of the mini-budget is similar to one five years ago.

Then-finance minister Martin introduced a mini-budget on Oct. 18, 2000 that contained tax cuts. Then-prime minister Jean Chretien called an election four days later.

The Liberals went on to win a third straight majority on Nov. 27.