Falling oil prices mean the federal government may not have the money to come through on promised tax cuts in 2015.

“In the absence of new measures to raise revenues or cut spending, TD is projecting budget deficits,” writes Randall Bartlett, TD Economics senior economist, in a research report. “The conclusion is unambiguous.”

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In the federal government’s November fiscal update, it projected a surplus of $1.9 billion in 2015-2016, and $4.3 billion in 2016-2017. Instead, TD says it will post a $2.3-billion deficit in 2015-2016, and a $600-million deficit the next year.

Finance Minister Joe Oliver had said to expect a $2.9-billion deficit in 2014-2015 in the fall fiscal update. TD says the shortfall will now be $3.1 billion.

With oil prices around $45 a barrel, the government’s tax revenues are shrinking, says Bartlett, so there likely won’t be a surplus until 2017-2018. That, too, will be smaller than the government planned. Instead of the $5.1 billion projected in the fall fiscal update, TD says it will likely be $1.3 billion.

In its November update, the government anticipated the price of oil would drop, but it counted on a price of $81 a barrel. Bartlett projects the price will stabilize at about $67 in 2015.

The government has set aside $3 billion for contingencies. If the deficits in 2015-2016 and 2016-2016 are less than that, there could still be an overall surplus.

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Such a slim margin makes it difficult for the Conservative government to implement a number of tax cuts promised in the 2011 budget. Some measures had been expected in the 2015 federal budget. That budget is scheduled to be the last before Canadians head to the polls in the fall.

Promised tax breaks include extending income splitting to more families, introducing an adult fitness tax credit and doubling TFSA contribution room. Were the government to double TFSA room and introduce the adult fitness tax credit, it would cost $3.2 billion over the next five years, TD estimates.

“With not much cash left in the kitty, further tax reductions, or additional spending will likely be difficult to come by,” says Bartlett.

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