Source: The Canadian Press

Ottawa will continue to cut business taxes to spur job creation but plans no major new spending programs in the coming budget as it tries to tame the deficit, says Finance Minister Jim Flaherty.

In a speech Monday, Flaherty said the federal government will move ahead with plans to reduce taxes for small and medium-sized businesses next year, part of legislation passed in 2007.

Flaherty said an academic study of the plan concluded it would lead to $49 billion in greater capital investment and 233,000 new jobs in Canada in the years ahead.

“To increases taxes on businesses now, as some of our opponents are proposing, would put hundreds of thousands of jobs in jeopardy at a time when our economy remains fragile,” the minister told the Oakville Chamber of Commerce as he continued a series of pre-budget consultations.

The 2011-12 federal budget is expected in late February or early March.

Flaherty has warned for months that Canadians should not expect any new spending programs in the coming budget that would trigger a rise in the deficit. In fact, Ottawa will begin to pare down its deficit beginning this year with spending restraint and the elimination of waste.

“We will not make significant new government spending commitments this year that would trigger bigger deficits and higher taxes,” the minister said in his speech.

“We simply cannot afford to risk the economic recovery and the future of your children and grandchildren by running large deficits longer than necessary.”

In Montreal on Monday, federal Conservative MP Maxime Bernier predicted that Flaherty will table a tough budget early next year.

“We will cut spending in the next budget and (we can) be sure that we will balance the budget as soon as possible.” Bernier said in an interview after a speech to the Montreal Economic Institute.

“The next budget will be a tough budget, it will be a conservative budget,” said Bernier, the former federal cabinet minister who has been generating attention in recent months for what some call his near-libertarian economic views.

“We will have to cut spending without increasing taxes, without cutting transfers to provinces and we will have to look in our own court and we will do it.”

IE