Harper rules out raising taxes to cut deficit

Tue Dec 22, 2009 12:55pm EST
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OTTAWA (Reuters) - The Canadian government will not raise taxes to rein in its budget deficit after a stimulus package ends next year but will focus instead on restraining spending to balance its books, Prime Minister Stephen Harper said.

Ottawa, which unveiled a two-year stimulus program in January, predicts the budget deficit this year will be C$55.9 billion ($53 billion). Some economists say this can only be eliminated with the help of tax increases.

"We won't be raising taxes, but we will be constraining growth (in public spending), making sure that growth is very much contained in the future, and that the tax base of the country can gradually recover," Harper told CTV television in an interview that was shown to reporters on Tuesday.

"And within four to five years, if we follow that path, we should be back to a balanced budget."

The minority Conservative government has cut taxes several times since it was first elected in January 2006.

Harper, who also said the next budget would be in March, played down the idea that Canada has recovered from the recession.

"I'm much more cautious. We don't yet have the kind of private sector-led growth that we need to see. We don't yet have a turnaround in the job market ... we're optimistic that 2010 is going to be a year of recovery."

($1=$1.06 Canadian)

(Reporting by David Ljunggren; editing by Rob Wilson)