The 2006-2007 budget unveiled by Flaherty is projected to post a surplus for the ninth consecutive year.

"For years, Ottawa has been overtaxing Canadians. In this budget, we deliver real tax relief for Canadians," Flaherty said in an address to Parliament. "That's the bottom line of this budget," he stressed.

The finance minister said the 2006-2007 budget will deliver 29 separate tax cuts or 20 billion Canadian dollars (18 billion US dollars) in tax relief over the next two years, more than all of the past four years combined under previous Liberal Party administrations.

The Conservative Party, led by Prime Minister Stephen Harper, swept to power in a general election in February after 12 years of Liberal rule.

Total government revenues are expected to climb to 227.1 billion Canadian dollars in the new fiscal year, while spending will rise to 188.8 billion Canadian dollars plus 34.8 billion dollars in public debt charges.

Some three billion dollars of a 3.6-billion-dollar projected surplus will go to paying down the federal debt, now at 483.4 billion dollars. Last year's surplus was estimated at eight billion dollars.

Canada is the only G7 nation expected this year to post a surplus, according to the government.

Canada's debt to gross domestic product (GDP) ratio, meanwhile, will continue its decade-long downward spiral, started in the mid-1990s under then Liberal Finance Minister Paul Martin, to about 31.7 percent by 2007-2008.

Although Ottawa remains flush with cash, uncertainty in commodity prices, a sudden drop in US home prices and a rising Canadian dollar -- which hit 90 cents US this week -- could negatively affect exporters, Flaherty warned.

Analysts said the huge tax cuts could fuel a hotting-up of the Canadian economy, although the high Canadian dollar is likely to mitigate inflationary pressures.

Opposition lawmakers said they would offer amendments to the budget and if they are rejected, would vote against the budget in the coming days.

But, stalwart Bloc Quebecois leader Gilles Duceppe said he would back the minority Conservative Party's budget, ensuring its likely passage.

Flaherty said Canada's military will receive 5.3 billion dollars over five years to recruit 23,000 more soldiers and to buy equipment to support "a multi-role, combat-capable maritime, land and air force".

More than 700 million dollars will go to arm border guards, beef up security at checkpoints, on passenger rail and urban transit, hire 1,000 new police officers and expand jails.

Some two billion dollars over five years will be earmarked for a "made-in-Canada climate change program" being developed, Flaherty said.

Last month, the Conservatives axed 15 programs aimed at reducing greenhouse gas emissions linked to global warming.

Fees charged to new immigrants to Canada will be cut in half to 490 dollars, as promised during the recent election campaign, while new funds will help settle immigrants.

The government also promised to help immigrants get their foreign professional credentials recognized in Canada, a major obstacle for many immigrants forced into low paying jobs here, despite a shortage of skilled workers.

Over the next two years, Canada's forestry industry will receive 400 million dollars to fight a devastating pine beetle infestation in western Canada and help companies hurt by a trade row over softwood exports to the United States.

Farmers will receive 1.5 billion dollars in aid, less than hoped by protesting farmers who stalked Harper in Ottawa last month in their tractors.

Other money will be used for affordable housing, childcare and education.

The Conservatives will also lower income taxes and small business taxes slightly, but null income tax cuts by the previous government, while Canada's corporate tax rate drops to 20.5 percent.

By raising the lowest tax threshold, the Conservatives will also bump 655,000 low-income Canadians off the tax rolls, Flaherty said.

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