Canadians should not expect big tax cuts or big spending this year, federal Finance Minister Jim Flaherty said Wednesday.

Flaherty made the comments to reporters at the Conservative Party caucus meeting in Lévis, Que.

"We're on track in our budgeting, but as you know we did not budget for a large surplus in this fiscal year 2008-2009," he said. "I'm satisfied and I'm confident that we're on track in terms of our revenues and our expenses over the year."

"But this is not a year for big new spending projects or big new tax reductions," Flaherty said.

Flaherty's comments come just a few days after the Finance Department said the federal government ran a deficit of $517 million in April and May, the first two months of its fiscal year. Over the same time period last year, the government ran a $2.8 billion surplus.

Through April and May revenues declined by $1.6 billion, or 4.1 per cent.

The revenue estimates for the first two months of the year include the impact of tax reduction measures for individuals, businesses and the GST. Corporate tax revenue fell by $1.1 billion, or 16.6 per cent, from the same two months of last year. GST revenues dropped by $1 billion, or 20.9 per cent, partly as a result of the one percentage point reduction in the GST rate, which came into effect Jan. 1.