A one percentage point cut in the Goods and Services Tax that kicked in at midnight will be one of the few new tax cuts Canadians should expect to see in 2008, Prime Minister Stephen Harper said Monday.

Prime Minister Stephen Harper (left) and Finance Minister Jim Flaherty unveil a sign in Mississauga, Ont., on Monday. The GST rate falls to 5% New Year's Day.
(Frank Gunn/Canadian Press)

The GST will drop from six per cent to five per cent, which Harper said will amount to about $6 billion in tax savings for Canadians in 2008.

Harper touted the GST cut during a return visit to the same Mississauga, Ont., electronics store where he announced the tax cut plans two years ago during the last federal election campaign.

The prime minister cautioned that Canadians shouldn't look forward to big tax cuts this year, as the economic outlook remains cloudy.

"We are not anticipating further reductions to the GST in the future. If we do reduce taxes, they may be in a different direction, but, as I say, that is for the future.

"We will be extremely cautious in the year to come. We're not going to undertake any long-run spending or tax reduction initiatives unless we believe they are affordable on a long-term basis."

Many economists see the Canadian economy slowing to a growth rate of between two and 2.5 per cent in 2008, as growth in the United States is expected to cool down.