Finance Minister says oil slump prevented further tax breaks in last month's federal budget.
OTTAWA — Canada’s finance minister says if he is re-elected this fall the Harper government would continue cutting taxes with help from the ever-smaller payments on the country’s shrinking federal debt.
Joe Oliver also revealed to a Bloomberg conference in Toronto May 21 how much last fall’s oil-price plunge chewed off the federal government’s bottom line.
The oil slump, he added during an on-stage interview, prevented the government from providing more benefits to Canadians in last month’s budget – including additional tax relief. Oliver’s fiscal plan projected a narrow $1.4-billion surplus this year.
“If the price of oil hadn’t fallen from about US$108 to US$44 (per barrel) there would have been perhaps another $6 or $7 billion to do even more,” Oliver said of the surprising price drop, which began last summer.
“So, there were things we had to delay and other things we couldn’t do as much of. But there will be more flexibility going forward as our economy grows.”
Asked about plans to reduce taxes even further, Oliver said the government has a “never-ending task” to keep taxes low and he insisted it will keep driving them down for both small and large companies.
The Conservative government has announced billions in tax relief over the last year, including an expansion to the contribution limit on tax-free savings accounts, lowering the tax rate for small businesses and a five-year, $27-billion tax-and-benefit package aimed at families.
Those family friendly measures, including the controversial income-splitting plan, were introduced last fall shortly before oil prices started the steepest stretch of their slide. Critics have called income splitting an unfair measure that favours wealthier Canadians.
Oliver said the government will have more opportunities to deliver tax relief and benefits as it reduces the country’s debt load, which would lead to lower debt payments as a proportion of expenditures.
“I see more opportunities ahead because we’re moving into a virtuous circle where we know not only are lower taxes more fair, and they make life more affordable, but they also produce more economic activity,” he said.
© 2015 The Canadian Press