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The Conservative government announced a greater-than-expected budget surplus on Thursday. Ottawa posted a $13.8 billion surplus last year, significantly higher than the $9.2 billion dollar surplus predicted earlier this year.

Finance Minister Jim Flaherty told CTV's Mike Duffy Live that record corporate profits are the prime reason behind the increased government revenues.

Flaherty added that the government will reduce personal taxes, but the additional money will also be used to pay down the national debt.

"Paying down debt is paying off tomorrow's taxes," he said. "And this is saying to the younger generation today... that we're not going to pass on this huge mortgage to you."

Ottawa reduced the national debt last year by more than $14 billion to $467 billion -- resulting in an annual savings of $750 million in interest payments.

Flaherty said that the government has reduced personal and income taxes, consumptions taxes through a cut in the GST, and excise taxes.

"There's more to do. Canadians are still over-taxed, so we'll do more," he said.

Commenting on CTV's Mike Duffy Live following Flaherty's interview, the head of the Canadian Chamber of Commerce said "the real question is whether we're going far enough, fast enough" when it comes tax cuts.

But the tax break from the $740 million savings will only save Canadians as little as $30 each. Some critics say the government should have used the entire $14 billion to slash taxes instead of only giving back the savings from interest payments.

"That is really just gouging Canadians for no reason, and this money would be better left in the hands of families," John Williamson of the Canadian Taxpayers Federation told Â鶹ӰÊÓ.

Perrin Beatty, who has previously said the government should focus on income tax relief before further reductions to the GST, said the government needs to focus tax cuts on areas that will help the poor and Canadian businesses.

"Our priority from the point of view of the Canadian Chamber of Commerce is that we focus on taxes which will improve productivity in Canada or ones that will give the most direct relief to lower income Canadians," said Beatty.

The federal Liberals, meanwhile, slammed the Tories for slashing programs, such as women's groups and literacy programs. Liberal finance critic John McCallum accused the Conservatives of deceiving Canadians in their budgeting after promising during the 2006 election to forecast surpluses accurantely and close to the bone.

"If you take the 2005 version of Stephen Harper at his word, then today's Stephen Harper has just admitted that he is running an unaccountable government by deceiving Parliament about the size of the federal surplus," said McCallum.

Saskatchewan's Minister of Finance, Pat Atkinson, reacted to the news on Thursday calling Harper a "stubborn" man for funneling the budget surplus into debt reduction rather than applying the funds to contested equalization payments for the province.

"We need him (Harper) to honour his election promise to our citizens in order for us to continue in a very positive way to contribute to the economic well-being of Canada. And he needs to get that message," Atkinson said.

Saskatchewan's NDP Premier Lorne Calvert contends Harper promised to remove non-renewable natural resource revenues from the equalization formula, but instead capped the amount of funding a province can receive under the program.

The premier has told his provincial Justice Department to sue the federal government to challenge the constitutionality of the reforms.

Meanwhile, Prime Minister Stephen Harper said the economy's strong performance does not mean Canada can now become complacent, but instead must continue to be economically prudent. He pointed out that Canada's forestry and manufacturing industries are facing challenges.

Flaherty added the Conservative government is paying down debt for the sake of future generations. But Tory insiders told Â鶹ӰÊÓ the prime minister will hold out the promise of big tax cuts in next month's Throne Speech, which could well turn into a potential vote grabber for the Conservatives if the government is toppled.

CTV's Ottawa Bureau Chief Robert FIfe said Harper is ready to go to the voters with a broadly-based tax cut, if he's defeated.

In Ottawa, election fever is "very high," said Fife. And because the Bloc Quebecois and NDP are most likely to vote against the Oct. 16 throne speech, it's up to a "very badly divided" Liberal party.

Some Liberal MPs told Â鶹ӰÊÓ they would either miss the vote on the throne speech because they plan to be "sick," while others are pushing Liberal Leader Stephane Dion hard to defeat the Harper govenrment.

"People close to Mr. Dion say he keeps changing his mind on whether or not to defeat the government, depending on who he last spoke to -- so stay tuned," said Fife.