Finance Minister Joe Oliver says the government can balance the next federal budget without scaling back on new tax measures and still turn up a small surplus, despite falling oil prices.
Oliver's comments come after TD Economics updated its forecast on Tuesday to project a $2.3-billion deficit in 2015-16 followed by a $600-million deficit for 2016-17. Under the new forecast, the government would return to surplus for the fiscal year 2017-18 rather than post a $1.6-billion surplus in 2015-16.
The TD forecast assumes oil prices will average $67.50 U.S. per barrel in 2015 and $80.25 in 2016. It is unclear what oil prices the government's projections are based on.
Oliver did acknowledge that plunging oil prices will "adversely affect" the government's corporate tax revenue.
?Asked if the government would have to scale back on any of its tax promises such as doubling the contribution limit for the tax free savings account, Oliver said the government would deliver on all of its promises.
TD's new outlook concluded that deficits over the next two years will make it difficult for the government to deliver on promises such as the tax free savings account or the introduction of the adult fitness tax credit.
Oliver said the government would not raise taxes or engage in "reckless new spending."
The TD report noted the government could tap into its $3-billion a year contingency fund to post a slim surplus.
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