Jim Flaherty, one of Canada's longest-serving finance ministers, has announced his resignation from cabinet.

Flaherty, first elected in 2006 after a long career in Ontario politics, says he plans to return to the private sector.

Prime Minister Stephen Harper issued a statement saying he had accepted Flaherty's decision "with great reluctance." Harper said he would name a replacement within days.

Sources tell HuffPost Canada that while Flaherty's resignation from cabinet is effective immediately, he will stay on as an MP for now. The prime minister's statement said that Flaherty would "eventually" return to the private sector.

"In a political career of almost 20 years, minister Flaherty has exemplified the best qualities of those who enter public life: a true commitment to service, and a sincere desire to leave the country in better shape than it was when he entered politics," Harper said in a statement.

Flaherty reflected with his family over Christmas and confirmed during the federal budget process this would be his last one, sources told HuffPost.

Flaherty was appointed to the key economic post when the Conservative government first came to power in 2006.

He managed the country's economy through one of its worst economic crises in 2008-2009, running up large deficits but leaving the books virtually balanced after his Feb. 11 budget.

Flaherty, who represents the Ontario riding of Whitby-Oshawa, has been struggling with health challenges over the last year. He acknowledged suffering from a rare skin condition, requiring him to take medication that led to weight gain and apparent fatigue in public appearances

He says the decision to leave politics is unrelated to his health, but is instead simply "the right decision for me and my family at this time."

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Flaherty released the following statement Tuesday afternoon:

Yesterday, I informed the Prime Minister that I am resigning from Cabinet. This was a decision I made with my family earlier this year, as I will be returning to the private sector. I am grateful to Prime Minister Stephen Harper for providing me with the opportunity and responsibility to serve Canadians as their Minister of Finance since 2006, one of the longest serving Finance Ministers in Canadian history. As a government, we achieved great things for Canada and I could never have accomplished what I have as Finance Minister without the full support of Prime Minister Harper. As I reflect on my almost two decades in politics, I am proud of the accomplishments of the governments I was part of, provincial and federal. In my time as Finance Minister, I am proud of the work I have done to help manage the deepest economic challenge to face Canada since the depression of the 1930s and ensure Canada emerged stronger and as a recognized economic leader on the international stage. Along with managing Canada’s performance during the global economic crisis, I am pleased our government brought forward positive measures to make Canada one of the world’s best places to do business. I am proud to be part of a government that: reduced Canada's business taxes to the lowest level in the G-7;

reduced other taxes 160 times;

introduced the Tax-Free Savings Account (TFSA) and the Working Income Tax Benefit (WITB)

took action on four separate occasions to protect Canada’s housing market; and

took historical steps to strengthen Canada’s securities regulation regime. I also made it a priority to help improve the well-being of people with disabilities. Our government has worked hard to ensure our country benefits from the talents and abilities of Canadians with disabilities. We improved accessibility through the Enabling Accessibility Fund, provided new investments for people with disabilities to join and contribute to the workforce, and helped improve access to financial independence through programs such as the Registered Disabilities Savings Plan (RDSP). My goal was always to get Canada back on track to a balanced budget after the large deficit we agreed was necessary in Budget 2009 to combat the Great Recession and protect Canadian jobs. As outlined in Budget 2014, I followed through on that commitment. There is no doubt that Canada’s budget will be balanced in 2015. Canada’s fiscal position is the envy of the developed world. All Canadians can be proud of the country’s performance. Now, I will focus on life beyond politics as I return to the private sector. I believe that I have served my country, province and constituents of Whitby-Oshawa to the best of my abilities and thank them for their continued trust and support for almost two decades. It has been an honour to serve Canadians with the Prime Minister, Cabinet and caucus colleagues and all Members of Parliament in the House of Commons. As many of you know, I faced a health issue over this past year. I have received much support and good wishes from Canadians across the country and for that, I am thankful. I am happy to report that I am on the road to a full recovery and the decision to leave politics was not related in any way to my health. This decision was made because it is the right one for me and my family at this time. I would also like to thank all Canadians who expressed their support and encouragement over my years in public service. I have often said that public service is a noble calling and have encouraged young people, including my own children, to consider it as a worthy career choice. I believe a career in the public service is the most satisfying and personally enriching career you will ever find. I want to thank my wife Christine and our three sons for their unwavering support during my time in public office. I am lucky to have such a wonderful family. As I begin another chapter in my life, I leave feeling fulfilled with what we have accomplished as a government and a country during one of the most challenging economic periods in our country’s history. We live in the greatest country in the world, and I want Canadians to know that it has been my honour and my privilege to serve them. Thank you.

NDP Leader Tom Mulcair released a statement praising Flaherty for his service to Canada.

"In the past year, Mr. Flaherty continued to serve in one of Canada’s most difficult jobs despite facing health challenges. He did so with the same strength of character and sense of humour that has characterized his tenure as the finance minister of Canada," Mulcair said.

Flaherty was born in Lachine, Que., on Dec. 30, 1949. He went to Bishop Whelan High School and Loyola High School in Montreal and earned a BA at Princeton University and a law degree from York University's Osgoode Hall Law School.

In his law career, he was a founding partner of the firm Flaherty Dow Elliott before going into politics in 1990, when he ran and lost provincially in the riding of Durham Centre.

He ran again in 1995, and won a seat in the legislature.

The new member for Whitby-Ajax entered Mike Harris's cabinet in 1997 as minister of labour. He also served as minister of finance, attorney general, finance minister, enterprise minister and deputy premier under Harris and his successor, Ernie Eves.

In 2006, after two unsuccessful bids to lead the Ontario Conservatives, Flaherty jumped to federal politics, winning the riding of Whitby-Oshawa in the election that gave Prime Minister Stephen Harper and the Conservatives their first minority government.

Harper gave him the Finance portfolio.

Flaherty quickly embarked on a program that focused on tax cuts. He began in 2006 by cutting the GST by one percentage point to six per cent. He pared off another percentage point in 2008.

In 2006, he also announced changes to the tax rules governing income trusts which sparked anger and prompted special hearings by the Commons finance committee.

Flaherty kept coming up with ways for people to reduce their taxes.

In 2007, he introduced the Registered Disability Savings Plan to help Canadians with disabilities and their families save for retirement. One of Flaherty's three sons has a mental disability and the minister wept openly when he announced the plan.

In 2008, he announced the Tax-Free Savings Account, which allows people to earn tax-free investment income.

He repeatedly brought in targeted tax cuts to help everyone from truckers to people buying sports equipment. He raised the basic deduction to get more low income people off the tax rolls entirely, cut a point from the lowest personal tax rate and raised the upper limits of the two lowest tax brackets.

In his 2013 budget, he boasted that the average family of four was saving $3,220 in taxes compared with their bill in 2006.

While he was a strong fiscal conservative, Flaherty wasn't afraid to plunge into deficit with spending programs to stave off the effects of the 2009 recessions.

The balanced budgets of the Liberal years plunged deep into the red as Flaherty pumped in money to support infrastructure projects and keep the economy from stalling completely.

He pledged, however, to get the books in balance in time for the federal election expected in 2015, and came close this year in last month's budget, which carried only a $2.9-billion deficit with a $3-billion contingency fund.

Flaherty is married to Christine Elliott, also a lawyer and a politician. She ran and won provincially in Flaherty's old riding when he resigned to seek a federal seat, leaving the couple representing essentially the same region in the legislature and the Commons.

They have three triplet sons — John, Galen and Quinn.

With files from The Canadian Press

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