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OTTAWA - Finance Minister Jim Flaherty delivered on Monday a budget packed with tax-break goodies for families, incentives to buy environmentally friendly cars and billions of dollars to fill provincial coffers.

Amid growing speculation of an early trip to the polls, the minority Conservative government crafted a something-for-everyone budget meant to appeal to a broad range of voters, particularly Canadians living in the suburbs outside Toronto, Vancouver and Montreal.

"Today we reduce the tax burden on working families, again; today we act to preserve our environment, today we move to improve our health-care system; today we crack down on corporations that have avoided paying their share; and today we take historic action to restore fiscal balance," Flaherty told reporters at the Ottawa Congress Centre before he rose in the House of Commons on Monday afternoon.

"This budget makes our strong economy even stronger and provides the necessary tools so that Canadians from all walks of life can reach their fullest potential," he said.

The Liberals and New Democrats refused to support the budget, but it did receive the backing of the Bloc Quebecois -- ensuring its survival in the House of Commons and quelling the hype over an immediate election.

The Conservatives are promising $39 billion over seven years for the provinces. But some will get a bigger share of the pie. "Have-not" provinces like Quebec, for instance, will receive $3.2 billion in transfers over the next year for social programs, infrastructure and equalization payments.

The government also zeroed in on families with children, low-income families and seniors in a move one senior Conservative described to Â鶹ӰÊÓ as a vote-getter.

Key measures include:  

• The Working Income Tax Benefit, which is intended to assist low-income Canadians who are making the transition from welfare to the workforce.
• A new $2,000 child tax credit that will provide up to $310 of tax relief for each child under 18
• $140 million over the next two years toward a Registered Disability Savings Plan
• Resources to the Canada Revenue Agency to detect and close down tax avoidance through offshore tax havens
• A rebate of up to $2,000 to buyers of fuel-efficient cars
• A levy of up to $4,000 on fuel-inefficient vehicles, which does not extend to gas-guzzling pickup trucks
• An increase in the age limit to 71 from 69 for registered retirement savings plans and registered pensions
• $300 million toward offering a vaccine to protect women against cervical cancer
• An end to the marriage penalty by increasing the spousal and other amounts to provide up to $209 of tax relief for a supporting spouse or single taxpayer supporting a child or relative

Thanks to continuing strong employment growth and high corporate earnings, Canada is expected to post a budget surplus in 2006-2007 of $9.2 billion.

Overall government spending next year will total $233.4 billion, up about 7 per cent compared to this year.

The finance minister also committed to pay down at least $3 billion a year on the $472 billion national debt.

About two-thirds of the budget is going toward resolving the so-called fiscal imbalance while the remaining one-third is committed to tax reduction and other spending initiatives, Flaherty said.

Resolving the fiscal imbalance

The transfers to the provinces are the government's solution to quieting a longstanding dispute over the so-called fiscal imbalance.

It is also designed to mollify premiers who say Ottawa takes too much of the national revenue pie and leaves them without the cash to deliver social programs to their provinces, which could influence the outcome of an early election.

Overall, observers say the government's fiscal agenda is an appealing, politically attuned package designed to win over middle-class -- and middle-of-the road -- voters who could help the Conservatives win a majority at the next election.

There's also the added twist of the March 26 election in Quebec, the results of which could be swayed by Flaherty's ability to deliver the goods for Premier Jean Charest, who is likely to take the credit for the funds the province will receive in the revenue-sharing deal with Ottawa.

Charest's success at the vote is vital to Prime Minister Stephen Harper's electoral hopes in the province, which stands to get the most equalization payments by virtue of its population.

"Of all the new transfers for the provinces, Quebec gets a full 30 per cent of the amount, so this will be a big boost for Charest," CTV's Chief Political Correspondent Craig Oliver told CTV.ca.

Flaherty's attempts to reach "working families" are designed to secure suburban voters in Greater Toronto Area and Quebec, two regions that figure heavily in the Conservative strategy to win a majority.

Tax breaks

While the budget includes significant tax relief, at the forefront of which is their anticipated showpiece measure, the Working Income Tax Benefit, there were no income tax cuts and the marginal tax rate stayed level at 15.5 per cent.

The Liberal government had cut the bottom tax rate to 15 per cent, but the Tories rescinded that in their first budget.

Notably absent was a measure targeting the wealthier segment of the population, a reduction of taxes on capital gains.

The minority Conservatives had promised in the last campaign to allow for deferment of the capital gains tax if profits from the sale of assets were reinvested within half a year.

Rather, the lifetime capital gains exemption for farmers, fishers, and small business owners was raised from $500,000 to $750,000.

As had been expected, the budget did not include iincome splitting, which would allow couples to average out their income and reduce the tax they pay.

However, the fiscal agenda did include pension splitting, which is meant to reduce the overall taxes for eligible pensioners.

The budget also promises to reduce the general corporate income tax to 18.5 per cent in 2011.

The move to introduce a levy on fuel-inefficient vehicles is expected to be popular with the environmental lobby and the NDP, whose backing would be vital if the Liberals and Bloc Quebecois were to oppose the Conservative government in a vote of non-confidence following introduction of the budget.

Overall, the budget commits just over $800 million to the environment in the 2007-2008, including $506 million toward the Tories' EcoTrust program. All told, the program is receiving $1.5 billion in spending, spread over three years.

The move to phase out lucrative tax breaks for oil sands, a source of greenhouse gases, by 2015 is another measure expected to pacify the New Democratic Party.

Budget votes

If the budget is defeated by the opposition parties, the Tories could use it as their campaign platform. The Conservatives, which hold 125 of the Commons' 308 seats, need the support of just one of the three opposition parties to avoid defeat on the budget.

The Tories have packed their second budget with spending and tax breaks that will make it risky for their political rivals to counter their efforts.

Regardless, the opposition will "nitpick" at the budget during the debates at the House of Commons, Oliver said.

Their criticism will amount only to sabre-rattling, he said, when it comes time to debate on the budget.

The first vote on the Canadian budget, which has the potential to topple the minority Conservatives, is set for Wednesday, when the House of Commons votes on a subamendment from the Bloc Quebecois.

Thursday is an unrelated "opposition day," during which the Liberals determine what the House will debate.

The government must then schedule another two days of debate on the fiscal agenda. At the end of the third day of debate, there is usually a vote on a Liberal amendment to the main government motion backing the budget.

The House would vote on the overall government budget motion at the end of the fourth and final day of debate.

The last of the three votes is always a confidence matter, on which the government stands or falls. Meanwhile, the amendment and subamendment -- depending on how they are worded -- may also be confidence matters.