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Finance Minister Joe Oliver takes questions from the media following an announcement at the Arts Market in Toronto on Monday, April 13, 2015.Darren Calabrese/The Canadian Press

A re-elected Conservative government would have room for further tax cuts as debt servicing costs decline, Finance Minister Joe Oliver says.

Mr. Oliver also acknowledged on Thursday that the fall in the price of oil over the past year forced his government to scale back its plans by as much as $7-billion for the 2015 budget that was released on April 21.

Speaking at a Toronto event organized by Bloomberg news service, Mr. Oliver predicted there will be more room to cut taxes in the years ahead.

"If the price of oil hadn't fallen from about $108 [U.S. a barrel] to $44, there would have been perhaps another six or seven billion dollars to do even more, so there are things we had to delay and other things we couldn't do as much of, but there will be more flexibility going forward as our economy grows," he said.

Tax policy is expected to be a key part of the political discussion leading to the federal election expected on Oct. 19. The Conservatives are campaigning on a package of family-focused tax cuts and a plan to nearly double the annual contribution limit for tax-free savings accounts. Liberal Leader Justin Trudeau recently countered with a proposal to scrap the TFSA increase and other Conservative measures in favour of reducing the middle-income tax bracket and offering tax breaks for families based on need. The Liberals are also proposing a new tax bracket for Canadians earning $200,000 or more, representing the top 1 per cent of income earners.

Federal revenues as a percentage of GDP are near the lowest levels in more than 50 years of records posted by the government. Mr. Oliver was asked if that means federal taxes are now as low as they can go.

"I think we could do more," Mr. Oliver replied. He noted that Canada's debt in relation to the economy is low by international standards and will shrink from about a third of GDP to one quarter by the end of the decade. Mr. Oliver did not comment on the potential impact of rising interest rates on federal finances.

"So, as the debt declines and as debt payments decline as a proportion of expenditures, there's more opportunity to provide tax relief and to provide other benefits to businesses and to Canadian families and to the Canadian middle class," he said. "I see more opportunities ahead because we're moving into a virtuous circle where we know not only are lower taxes more fair and they make life more affordable but they also produce more economic activity, so we want to see that continue."

The April 21 budget forecast surpluses totalling $13.1-billion over five years in addition to $7-billion that was set aside for contingencies over that period.

While he said the Conservatives would have more fiscal room to cut taxes, Mr. Oliver also argued that the economic policies of the NDP and the Liberals would not work.

Mr. Oliver took issue with the fact that the Liberals' proposed new tax bracket would bring the combined federal and provincial tax bracket above 50 per cent in several provinces. He said international examples show that new tax brackets at those levels have not produced the expected revenue.

"It's a failed policy," he said. "It's interesting. The leader of the NDP party, Thomas Mulcair, has said that when you get taxes over 50 per cent, it's no longer taxation, it's confiscatory. It's a good line. I think we'll use it."

The Liberals have rejected Conservative criticism of their tax proposal, saying that, by providing the Canada Revenue Agency with more enforcement powers, the new tax bracket would be able to meet the party's target of generating $3-billion a year in new revenue.

A report released on Thursday by the Institute for Research on Public Policy said income inequality is an issue in Canada that is expected be a key part of the policy debate this election.

"Canada is on the leading edge of the 99/1 phenomenon, with the [Organization for Economic Cooperation and Development] estimating that the top 1 per cent of Canada's income earners have captured 37 per cent of total income growth over the past three decades," the report states. The report also says there is evidence to support both sides of the debate. While income inequality has worsened considerably since 1980, it has largely stabilized since 2000.

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