Newspaper article The Canadian Press

Tax Cuts Coming, but Ottawa Won't Blow Surplus on Major Spending: Oliver

Newspaper article The Canadian Press

Tax Cuts Coming, but Ottawa Won't Blow Surplus on Major Spending: Oliver

Article excerpt

Won't blow surplus on major spending: Oliver

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OTTAWA - Finance Minister Joe Oliver says the federal government could have more than $9 billion in surplus to play with next year, but Canadians shouldn't expect any massive new spending programs.

"We don't intend to launch a massive, reckless spending program because we've spent too much time and devoted too much work in reducing the deficit and eliminating it to throw it all away," he told reporters at a media event.

"Deficit spending over the longer term is a path to economic decline and we're not going in that reduction."

Oliver said he still plans to reduce taxes once the deficit is eliminated in the 2015-16 budget, which will likely come next winter, but Wednesday's statement also suggests he will be cautious about how deep the cuts will be -- at least initially -- so as to not jeopardize the surplus.

It was also unusual for the finance minister to include the $3-billion security blanket predecessor Jim Flaherty had inserted into his calculation in recent years of the room the government had to increase spending or cut taxes. The March budget estimated the 2015-16 surplus at $6.4 billion, but Oliver is also including the contingency fund to arrive at $9 billion.

That still may be modest. Earlier this week, the Parliamentary Budget Officer estimated the 2015 fiscal year surplus could result in a $7.8-billion surplus, which once the contingency fund is piled on, would produce close to $11 billion in fiscal room for Oliver to use in tax cuts, spending or debt reduction.

With an election scheduled for October of that year, the Harper government is counting on a sizable surplus in order to make good its 2011 promise to introduce income splitting for families -- or another such scheme -- prior to the campaign. Analysts have estimated the program would cost about $2.7 billion as originally designed, with up to $50,000 of income transferable between couples in order to reduce the tax bite on the higher earner. …

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