Jim Flaherty says budget 2014 will crack down on money laundering

Federal finance minister Jim Flaherty says he will outline the government's plans to curb the link between terrorists, organized crime and charities, as part of stricter rules coming in the federal budget next week.

"There are some terrorist organizations, there are some organized crime organizations that launder money through charities, and make donations to charities," he said during a news conference in Toronto on Friday.

"That's not the purpose of charitable donations in Canada, so we're becoming increasingly strict on the subject. You'll see some more on Tuesday."

The finance minister did not say what specific measures he'd take, but said he's not concerned about suggestions that changing rules for charities would be perceived as a way to silence critics of the government.

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"If the critics of the government are terrorist organizations, and organized crime, I don't care," he said.

Over the past few years, Flaherty has taken a stronger stance against charities, drawing criticism the government is singling out those that have spoken out against its policies. In the 2012 budget, he dedicated $8 million to monitor their political activity.

Earlier this week, several environmental charities raised concerns the Canada Revenue Agency is sifting through their books to see if they meet requirements that restrict political advocacy.

CBC News reported that if the groups exceed the limits on how much political advocacy they can do, their charitable status could be revoked, which would effectively shut them down. The organizations include the David Suzuki Foundation and Tides Canada, and several are strong critics of the Conservative government.

Price gap remains an issue

Flaherty suggested he'd tighten the watch on charities during the traditional pre-budget shoe fitting in Toronto, an annual photo op that foreshadows the theme of the budget.

This year, Flaherty chose a Canadian shoemaker for the photo-op. The event was held at Mellow Walk Footwear, a factory in Toronto that makes industrial safety shoes, and is one of the last shoe manufacturers in the country. The family run business has about 50 employees, said president Andrew Violi.

Price parity between U.S. and Canadian goods will also be on the agenda next week, he said, as the value of the Canadian dollar continues to slide against the U.S. dollar.

"We have not let that issue go away," he said. "We had the Senate committee do some work for us and we are on top of it."

Flaherty chose steel-toed black wingtip shoes, which he said were "good working shoes for a good working budget."

He slipped them on over a pair of blue, white and green striped socks he joked were his "Conservative socks."

The government is planning to post a surplus in 2015, just in time for the next election. The extra cash would allow them to pay for some long-promised election goodies, including income splitting for families, which he admitted would most benefit couples where one parent has no income.

Flaherty would not say if he expects the budget surplus in 2015 to be more than the $3.7 billion forecast in November.

"Could be. We'll see. The world economy is still fragile," he said. "As you know, the equity markets were hammered on Monday. We just need to be cautious in what we do."

His comments also suggested it's unlikely that the government will balance the budget earlier than expected.

"We always said we would get back to a balanced budget and every year we chipped away at it, and now we're almost there," Flaherty said.

"If you make a plan you have to stick with it," he added.

A report Friday that showed the Canadian economy gained 29,400 jobs in January, after a downturn in December, is expected to bolster Flaherty's position as he prepares to deliver the budget on Feb. 11.

Statistics Canada reported the unemployment rate slid 0.2 percentage points to 7.0 per cent for January, as the number of full-time jobs increased. Analysts caution that the employment trend is still sluggish.