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TORONTO — The Harper government announced it ran a larger-than-expected budget surplus of nearly $14-billion last fiscal year and immediately pledged to return $725-million of this to voters as tax breaks.
The rebate, offered up as election speculation rises, would amount to $30 to $40 for each taxpayer if doled out broadly.
Prime Minister Stephen Harper unveiled the surplus and tax cut in a campaign-style event in Toronto, instead of Ottawa where fiscal results are usually released each fall.
Celebrating the huge surplus — which grew 50 per cent above forecast — was a change of tune for the Conservatives, who used to savage Liberal governments from the opposition benches for big windfalls.
Prime Minister Stephen Harper congratulates Finance Minister Jim Flaherty on March 19 after the government's budget speech. (Chris Wattie/CP)
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Federal surpluses, once celebrated, have come under attack in the past decade by the right, the left and provincial premiers, all of whom accuse Ottawa of hoarding cash.
Yesterday, it was the Conservatives' turn on the defensive as fiscal critics decried the promised tax cut as a pittance and chided them for not returning more to voters.
"They sell massive surpluses as good news, just like the Liberals did," Canadian Taxpayers Federation chief John Williamson said, noting the Tories used to say big surpluses were evidence Canadians were overtaxed. "A $14-billion surplus means Ottawa is overtaxing Canadians by $14-billion."
Last year's surplus, one of the biggest in a decade, was buoyed by surging corporate tax revenue, particularly from the booming resource sector.
In some ways, the Conservatives tried to play down their embarrassment of riches.
"I'd respectfully question the use of the word gigantic," said Finance Minister Jim Flaherty, correcting one description of the $13.8-billion windfall. "We're talking about a surplus that is 1 per cent of Canada's [economic output]." But Mr. Harper tried to show how a big windfall is paying dividends. He said the surplus, together with some accounting policy changes, has ended up reducing Canada's debt and liabilities by $14.2-billion.
The Prime Minister said this ultimately saves Ottawa close to three-quarters of a billion dollars in interest, adding the cash will be funnelled to Canadians as tax cuts under a "tax-back guarantee" the Tories passed into law this year.
"Every time we reduce the debt, the interest savings will go back where it belongs in the pockets of hard-working Canadian taxpayers," Mr. Harper told reporters.
Asked how big Tory surpluses differ from Liberal surpluses, the Conservatives resorted to election-style attacks, suggesting their opponents wasted windfalls. Mr. Harper even hinted at the Liberal sponsorship scandal.
"And, you know, we're not going to use these extra savings the way the previous government did to — well, we can talk about how they spent money and who got it," Mr. Harper said. "Obviously we're using it to reduce taxes."
The opposition Liberals accused the Tories of revising history, pointing out that they used budget surpluses to reduce Canada's debt by $68.2-billion after balancing the federal budget a decade ago.
Mr. Williamson said he thinks the Conservatives are holding back bigger tax-cut announcements until an election or the next budget.
Mr. Flaherty left the same impression when he said the Tories have more cuts in mind. "Stay tuned because there's more to be done," he said.
Liberal finance critic John McCallum said the Tories have broken their promise to avoid any more "surprise surpluses." He questioned whether all Canadians would see the tax-back cash, saying the Tories have so far avoided broad-based relief.
NDP Leader Jack Layton called for Mr. Harper to put the question of how to spend the surplus to a majority vote in the House of Commons.
"This is not a reasonable approach," he said of the $14.2-billion debt pay-down.
With a report from Bill Curry
