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Winnipeg Free Press - PRINT EDITION

Federal deficit for year stands at $6.2B so far

By: Staff Writer

Posted: 10/27/2012 1:00 AM | Comments: 0

OTTAWA -- A sharp drop in corporate tax revenues in August helped push Ottawa's deficit for the current fiscal year to $6.2 billion, about double the figure at the end of the previous month, the federal government reported Friday.

The Finance Department said the August deficit was $3.2 billion, slightly more than the $3.1 billion recorded in the same month of 2011.

Corporate tax revenues fell $239 million to $1.53 billion, a 13.5 per cent decline compared to August 2011 and a 16 per cent decline from $2.1 billion in July this year.

Ottawa remains on sounder fiscal footing than last year at this time, when its deficit stood at $9 billion after the first five months, but the government is no longer as far ahead as its strives to cut the annual deficit to $21.1 billion.

That's to be expected, said TD senior economist Sonya Gulati, given the economy has underperformed in the first half of the year with growth rates below two per cent.

Finance Minister Jim Flaherty is to issue a mid-term report card on the government's books in a few weeks.

Gulati said she expects Flaherty to report the deficit estimate for the 2012-13 fiscal year will be close the $21.1-billion budget target, and that Ottawa won't return to surplus until 2015-16. The government recently closed the books on last year's $26.2-billion deficit.

During August, total federal tax revenue rose $372 million to $19.1 billion as increases in personal, GST and employment insurance receipts offset the setback in the corporate sector.

Total expenses increased year-to-year by $442 million to $22.28 billion. Ottawa spent $513 million more on programs this August as transfers to people and program expenses rose, but that was partially offset by a decline in public-debt charges, which fell 3.1 per cent to $2.24 billion in August.

For the fiscal year so far, the government said its tax revenues are up $3.4 billion, or 3.4 per cent, while program expenses rose at a slower pace -- 1.5 per cent, or $1.4 billion.

Personal income tax receipts are up 3.8 per cent for the year so far, while corporate taxes are up 1.3 per cent.

The government paid about $900 million less in the first five months this year to service the national debt, reflecting low interest rates.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition October 27, 2012 B10

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