Canadian Budget Deficit Narrows

by Mike Godfrey, Tax-News.com, Washington

04 February 2011

The Canadian budget deficit fell by almost more than CAD10bn in the first eight months of the fiscal year to the end of November, thanks in large part to higher tax revenues, Minister of Finance Jim Flaherty has disclosed.

November 2010 revenues increased by CAD2.6bn, or 15.4%, compared with the same month in 2009, reflecting increases in personal and corporate income tax revenues and other revenues, but partially offset by a decline in Goods and Services Tax (GST) revenues. Program expenses were up CAD2.4bn, or 12.9%, largely reflecting an increase in transfer payments. Meanwhile, public debt charges increased by CAD0.3bn.

The November 2010 financial results reflect the impact of the government's sale of a portion of its holdings of common shares in General Motors and asset and liability revaluations associated with the automaker's initial public offering on November 18, 2010.

For the first eight months of the 2010–11 fiscal year however, Canada’s budgetary deficit stood at CAD26bn, compared with a deficit of CAD36.3bn reported in the same period of 2009–10. The November 2010 budget deficit was marginally higher than in November 2009, at CAD4.5bn.

Over CAD11bn of the CAD26bn deficit was attributable to actions taken under Canada’s Economic Action Plan, including tax reductions, Employment Insurance-related measures and infrastructure funding.

Revenues were up CAD10.5bn or 7.7% in the first eight months, primarily reflecting higher personal and corporate income tax revenues, GST revenues and other revenues. Program expenses were down CAD0.5bn, or 0.3%. Public debt charges were up CAD0.6bn on a year-over-year basis.

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