Flaherty promises to cut taxes, reform regulation

It may be tough to accomplish with a minority government, but the new finance minister has assured the financial industry that he will stick to the Conservative Party’s promise to cut taxes while maintaining a balanced budget and paying down debt.

Speaking to the Investment Dealers Association in Toronto on Tuesday night, Jim Flaherty also suggested he will work with the community to harmonize securities regulation in Canada.

“I’m well aware of the problems facing your industry,” said Flaherty. “I know for example that the current securities regulatory system needs to be improved and I look forward to collaborating with my provincial and territorial counterparts in creating a twenty-first century securities regulation system.”

But perhaps because of the upcoming budget, which he said would be announced in a few weeks, Flaherty would not go further on what form a “twenty-first century securities regulation system” might take.

While saying the federal government would allow the provinces to work the system out themselves, he did let slip that he would like to see Canada “move toward a single regulator.”

He said strong efforts have been made in the recent past by other levels of government, and while he would not get into specifics, he added that Ottawa does have a role to play to enhance what he called the “economic union.”

Another aspect of that economic union is the fiscal imbalance which the government of Ontario has complained drains more tax from the province than it sees back in services. Flaherty said that as a former Ontario finance minister, he was well aware of the issue, but again cited the looming budget as a reason not to comment.

He did, however, reiterate the promise to cut the GST to 6%, calling it a tax cut that benefited all Canadians, including those who pay no income tax at all. It is unclear how that may be true, however, since those with the lowest income generally receive GST rebates anyway.

Flaherty was again quite on whether the Liberal tax cuts enacted last fall would remain in place, instead asserting that Canadians would see their overall tax burden decline.

Filed by Steven Lamb, Advisor.ca, with files from Joel Kranc, Benefits Canada, steven.lamb@advisor.rogers.com