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Finance Minister Jim Flaherty urged provincial governments today to lower their taxes and balance their budgets as quickly as possible to enhance the country's ability to compete globally.
Flaherty repeated his pledge to eliminate the federal government's deficit by 2015 and said if provinces took steps quickly to do the same, the country would have the best fiscal standing in the Group of Seven advanced economies.
"If other levels of government implement their budget measures as planned, the total government debt in this country -- all government debt combined -- will also meet G20 objectives (agreed at the 2010 summit in Toronto," Flaherty said in a speech in Halifax, Nova Scotia.
"So like the commitment to keep taxes low ... this would result in a solid, competitive advantage at a time when other countries are struggling to get their fiscal houses in order."
He also pressed provinces to follow Ottawa's lead in cutting business taxes. The federal business tax is scheduled to drop to 15 percent in 2012, and Flaherty hopes the average provincial rate will drop to 10 percent by then for a combined rate of 25 percent.
Flaherty said the only way to guarantee full funding for social programs like health and education would be for provincial governments to commit to tighten their spending now and eliminate deficits.