Oliver Says Canada in Happy Position Before Budget UpdateGreg Quinn
Canadian Finance Minister Joe Oliver said the country’s fiscal strength means he can consider options from tax cuts to boosting transfer payments as he consults the public ahead of the next budget update.
“We are in the happy position for Canadians to be able to do it all, but not to excess,” Oliver told reporters in Washington today, where he is attending meetings at the International Monetary Fund. “We will increase infrastructure payments, and we will reduce taxes, and we will be able to do all that and still stay in a surplus position.”
While Oliver declined to say if any specific measures will be taken in the country’s fall fiscal update, he referred to past government intentions to lower taxes and avoid a “wild” burst of new spending. He said it would be unusual to include major measures in a fiscal update instead of a full budget, adding he wasn’t “signaling anything” about his plans.
Prime Minister Stephen Harper said Oct. 2 Canada will run a small deficit in the current fiscal year before returning to surplus in 2015. The shortfall in the fiscal year that ended March 31 was C$5.2 billion ($4.7 billion), beating the government’s original projection by more than C$11 billion.
Canada has already begun to use up some of its fiscal cushion, which it forecast at more than C$40 billion between 2015 and 2018 in its February budget. Last month, Oliver cut payroll taxes for small business at a cost of C$550 million over two years. Today, Harper announced he would double a child fitness tax credit and make it refundable.
The child fitness measure is one of the promises made in the 2011 election campaign that Harper said would be fulfilled once the country eliminated its deficit.
Oliver said he is “hoping” to complete a voluntary agreement to cut so-called interchange fees on credit cards, saying he is concerned they are much higher in North America than other parts of the world.
“What we want to do is be fair to merchants, who are paying a big fee, and to consumers,” he said today. The government, which flagged the issue in its 2014 budget, wants MasterCard Inc. and Visa Inc. to voluntarily curb fees by about 10 percent, a person familiar with the talks told Bloomberg News last month.
Canada’s housing market is not in a “bubble,” Oliver reiterated today, adding there is a “two-tier market” with higher prices in Vancouver, Toronto and Calgary. No “dramatic” actions will be taken to scale back the government’s involvement in the housing market, he said.
The country’s economy will continue to find support from demand for its energy and commodities from nations such as India and China, even if some prices have dropped recently, Oliver said.
“The intermediate and long-term growth prospects for energy demand is strong,” he said. “The demand for energy is huge, and so I think energy prices will be ok.”