Flaherty says our long-term economic prosperity depends on sticking to the plan, noting that Canada has the best fiscal position in G7.
OTTAWA—Finance Minister Jim Flaherty is once again asking opposition parties for their best ideas on the upcoming federal budget, but only if they cost the government little or no money, or don’t involve raising taxes.
Flaherty’s traditional pre-budget letter to the opposition was issued Sunday, and like last year’s missive, it makes clear that only “low to no-cost ideas to grow the economy” will be considered.
The minister’s letter also welcomes any ideas to eliminate “ineffective” spending.
“I will not entertain the traditional ‘laundry list’ of new spending or subsidy programs typically sent from the opposition,” Flaherty writes.
“Additionally … I will reject any proposal to impose new taxes on Canadians as recently suggested by the opposition _ from increased business taxes to taxes on carbon.”
Flaherty has made it a point of personal pride to eliminate the deficit—now at $17.9 billion annualized—in the 2015 budget cycle, a goal analysts say he will easily achieve barring an unexpected and sharp economic reversal. The latest estimate is that Ottawa will post a $3.7-billion surplus that year.
The date, an election year, has important political implications because it would allow Prime Minister Stephen Harper to campaign on some costly promises he made in 2011, to be implemented only once the books were in the black.
The Conservatives have promised to establish partial income splitting for couples with dependent children, double the amount Canadians can sock away in tax-free savings accounts to more than $10,000 a year, establish an adult fitness tax credit and double the child tax credit.
All those measures would cost the treasury about $3 billion annually, but Flaherty suggested recently some could be phased in.
The Parliamentary Budget Office concluded in a recent report that part of the government’s success in lowering the deficit since the recession has been achieved through strict cost-cutting, including spending about $10 billion less than budgeted for in each of the past three years.
The 2014-15 budget, likely to be introduced in March, is critical to the government’s plans because Ottawa has pencilled in a big drop in the deficit to $6.6 billion next year, down from the current $17.9 billion.
Flaherty says in the letter he believes the country’s long-term economic prosperity depends on sticking to the plan, noting that Canada has the best fiscal position in the Group of Seven big industrial nations.
With global risks still high, it is important to remain fiscally prudent, he says.
“We cannot be complacent,” Flaherty warns. “Significant economic challenges from beyond our borders, especially from Europe and the United States, will continue to negatively impact Canada.”
“As such, I welcome low to no-cost ideas to grow the economy, as well as suggestions to eliminate ineffective spending.”
The minister is also expected to meet with the opposition finance critics, but has not yet set a date.