The Conservative government is expected to announce billions in tax cuts and new spending on Monday in a budget that, Finance Minister Jim Flaherty says, the opposition may find tough to vote against. 

The budget's centrepiece is expected to be a resolution of what is often called the provincial fiscal imbalance that will provide provinces and territories up to $3.5 billion in additional annual transfers to help them pay for health care, post-secondary education and infrastructure.

Federal Finance Minister Jim Flaherty helps his son John, 16, try on a pair of skates at a sporting goods store in Whitby, Ont., on Sunday.
(Frank Gunn/Canadian Press)

"We're going to resolve once and for all this continuing problem we've had, this bickering between governments in Canada about fiscal imbalance," Flaherty said Sunday. "We're going to restore fiscal balance on a principled long-term predictable basis in Canada."

The finance minister is also expected to introduce tax cuts and credits totalling about $3 billion that would give each taxpayer about $200 a year.

Specifically, Flaherty is expected to offer:

• An annual tax-back guarantee worth about $800 million realized from interest savings from paying down the debt.
• A capital gains tax reduction on investments.
• A low-income tax credit to encourage Canadians to move to work from welfare.
• Income splitting for seniors.
• A broad-based income tax cut for individuals.

It's not expected that there will be any new personal income taxes in the budget, which will be tabled at 4 p.m. ET on Monday.

The remainder of the projected $8 billion planning surplus is expected to go to energy conservation initiatives, such as rebates for hybrid vehicle purchases, post-secondary education, the child tax benefit, a new approach to research and development emphasizing applied science, and the military.

While shopping for a pair of skates for his son in his hometown of Whitby, Ont., Flaherty told reporters on Sunday opposition parties will find it tough to vote against the new budget.

The minister said that while the opposition should be able to support the budget, the Conservatives have a minority government, so the opposition controls whether there will be an election.

"We're ready for an election if the opposition parties want one," Flaherty said. "I don't hear a lot of demand for an election, but it's really up to them.

"I hope the opposition parties will put the interests of Canadian families ahead of their own self-interest," he added.

Opposition doesn't want election either

Opposition leader Stéphane Dion told CBC News he doesn't want an election.

"I hope the budget will be everything the last budget wasn't," he said, adding that the 2006 budget was unfair for ordinary Canadians, and cut environmental programs.

"We hope the next budget — the budget of tomorrow — will be good for Canadians, enough that we may support it," Dion said.

NDP finance critic Judy Wasylycia-Leis told CBC News that "it'll be very hard for us to support the budget" if it isn't progressive, if it doesn't address the prosperity gap between the rich and poor, and if it doesn't invest in education and child care among other things.

"We're hoping that somehow we can keep Parliament working for all Canadians," she said.

with files from Canadian Press