Finance Minister Jim Flaherty is ruling out the key budget demand of the Liberals and NDP, saying next year's corporate tax cut is going ahead.
He also says it will be "very difficult" for Ottawa to strike an harmonized sales tax deal with Quebec before the budget, a condition laid out this week by Bloc Québécois Leader Gilles Duceppe.
Mr. Flaherty's comments, which he made Wednesday in an interview with CBC's Power and Politics, suggest at least one of the opposition parties may have to swallow their words if a spring election is to be avoided.
In the runup to the 2011 budget, both the Liberals and NDP have said they are strongly opposed to further corporate tax cuts, which has led to speculation that the Bloc may be the most likely option to support the government's budget, given that talks have been underway for months between Ottawa and Quebec that would see the province harmonize its sales tax in exchange for federal compensation.
But Mr. Flaherty said those negotiations are going much slower than he would like.
"These discussions have been going on for a long time and regrettably there's still a long list that the officials are working on," he said. "So I'm concerned about any expectation that this would be accomplished quickly. It hasn't been accomplished quickly in the past year. There's some difficult issues that need to be addressed by Quebec primarily."
On the issue of corporate tax cuts, Mr. Flaherty said there is plenty of evidence that they are creating jobs and increasing government revenues.
"Parliament has already passed the law that the business taxes continue to drop," he said. "It won't be in my budget this year. It's already the law in Canada."