Tories mull income tax cut

Canada's Finance Minister Joe Oliver poses for a portrait in the Canadian High Commissioner's...

Canada's Finance Minister Joe Oliver poses for a portrait in the Canadian High Commissioner's official residence in London. REUTERS/Neil Hall

Giuseppe Valiante, National Bureau

, Last Updated: 8:38 AM ET

OTTAWA — Finance Minister Joe Oliver says the government is considering reducing income tax in the next federal budget now that the books are balanced.

This year's budget predicted the federal government will have a $6.4-billion surplus in 2015. The improved fiscal outlook means Canadians can expect a mix of "prudent" new spending as well as tax cuts, Oliver said.

He made the announcement before the finance minister's annual summer policy retreat with business leaders and economists in Wakefield, Que., 30 km north of Ottawa.

"We're talking about reducing taxes for Canadian families," Oliver said. When pressed if that means the government is considering income tax cuts, Oliver replied, "That's correct."

Since coming to power in 2006, the Conservatives have cut business taxes, sales tax by two percentage points and income tax by one, which led to criticism the government was hampering its ability to pay for services.

The Conservatives' cuts have removed $30 billion worth of revenue from the government's coffers, the parliamentary budget officer reported in May.

Opposition parties criticized the government for its focus on tax cutting as opposed to spending increases for services such as social housing and job creation programs.

Despite the federal tax cuts, Canadians still give roughly 42% of their annual income to the three levels of government, according to a Fraser Institute report published Tuesday.

The think-tank's report says Canadians pay more in taxes than they do for food, shelter and clothing combined.

Oliver said the 42% "is a large amount," but he wouldn't give the percentage he feels would be appropriate for Canadians to pay in taxes.

"The federal government is not the problem," he said. "From our point of view, we are doing what we can (to reduce taxes)."

The summer retreat includes representatives from the big Canadian banks, as well as from Rio Tinto, Costco and Hydro-Quebec.