Finance Minister Jim Flaherty's fall fiscal update is expected to fulfill an election promise to cut the GST to five per cent, CTV News has learned.

Flaherty has said he'll give the update at 4 p.m. ET after the markets close, perhaps indicating that it contains several major tax reductions.

"Well, we certainly feel that Canadians pay too much tax," he told reporters.

Analysts said the GST cut could be timed for the holiday season, and would also be aimed at keeping Canadians from shopping in the U.S. to take advantage of a strong loonie.

After the GST cut, a $30,000 car would cost $300 less, and Canadians would save 50 cents on a $50 Christmas tree.

"It's one percentage point less in taxes than you would otherwise pay, and you see it up immediately the minute the rate comes off," Jeff Rubin, chief economist for CIBC World Markets, told CTV News.

Liberal Leader Stephane Dion said Monday he would prefer income tax cuts rather than reducing the GST.

"Compared with income tax cuts, a GST cut does nothing to improve our competitiveness in the world economy and does little to improve the fairness of our tax system, improve our productivity and move our economy forward," he said in a statement.

"The experts are united against a GST cut and we Liberals agree with them. It seems there is only one person who studied economics that wants to cut the GST -- and his name is Stephen Harper."

The government promised in its Oct. 16 throne speech that it would reduce the GST, and likely has the spending room to cut income taxes as well.

Last week, the department announced it had built up an $8.7 billion budgetary surplus in the first five months of this fiscal year.

"The government can easily afford it," said Rubin. "They are probably looking at another $15-billion-plus surplus. The GST cut is somewhere around $5 billion.

Dion has suggested he wouldn't topple the government over a GST cut, although he hasn't given a firm answer, while the NDP would likely oppose any major business tax reductions.

Flaherty wanted to present the fiscal update in the House of Commons -- another possible hint it will include major tax cuts -- but the NDP hasn't given its consent.

"If I can't do it in the House of Commons because of the NDP, then I'll do it somewhere else," Flaherty told reporters.

When former prime minister Paul Martin was a Liberal finance minister, he presented his fiscal updates in front of the government's finance committee.

Liberal whip Karen Redman dismissed the government's move to deliver the update on the floor of the House as a publicity stunt.

"We see Mr. Harper looking for maximum media coverage, and to ratchet up the expectations of Canadians to create some drama that isn't necessarily there," she told CTV's Mike Duffy Live.

Along with shaving another percentage point from the GST, Flaherty is also considering income splitting for all Canadian couple. The move would likely cost the government $5 billion.

He may also scrap the mid-range 26 per cent tax bracket and trim the lowest bracket to 15 per cent.

With a report by CTV's Robert Fife and files from The Canadian Press