Canadian Budget Deficit Shrinking

by Jason Gorringe, Tax-News.com, London

29 December 2011

The Canadian monthly budgetary deficit has fallen markedly year-on-year, to CAD2.2bn (USD2.15bn) in October, down from CAD4.1bn reported during the same month a year earlier, according to the latest Fiscal Monitor published by the Canadian Ministry of Finance.

Revenues have increased by CAD1.4bn, or 8.1% year-on-year, the Ministry attributing this to higher personal income tax, corporate income tax and Goods and Services Tax revenues as the economy recovers from the economic downturn.

Government expenditure fell by 3.2% reflecting lower transfer payments and other program expenses. Public debt charges, the cost of financing the nation's debt, increased by CAD0.1bn during the month.

For the five months since the beginning of this fiscal year, in April 2011 for Canada, there has been a budgetary deficit of CAD15.4bn, this compared to a deficit of CAD21.5bn reported in the same period in FY2010-11.

Over the period, compared to the first five months of the 2010-11 fiscal year, revenues expanded by CAD5.7bn, or 4.5%, primarily reflecting higher income tax revenues. GST revenues fell during the period, compared to those recorded in 2010.

Expenditure for the five-month period fell CAD1bn compared to last year (0.8%) but public debt charges rose by CAD0.6bn.

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