New numbers from the Finance Department indicate the stronger economy is helping the federal government
run smaller budget deficits than at the same time last year, as tax revenues increase.
Through the first two months of the current fiscal year, April and May, Canada's deficit sits at $4.4-billion, compared with $7.5-billion in the same period of 2009 when the economy was still in recession. Finance Minister Jim Flaherty’s budget in March shows the government projects that the $54-billion budget shortfall it had at the end of the last fiscal year will shrink to just over $49-billion this year.
The new figures released Friday are part of Finance's monthly Fiscal Monitor report, which breaks down the money flowing in and out of the government's general revenues.
The government took in $2.4-billion more in taxes during April and May compared with the same months in 2009, the report said, including a 4.2 per cent increase in personal income-tax revenues as Canada’s economy created almost 134,000 net new jobs in the two-month period. However, corporate income-tax revenue dropped by 13.5 per cent, according to the report.
About $1.8-billion of the deficit so far this fiscal year is attributable to the Conservative government's stimulus measures – called the Economic Action Plan – which includes tax cuts and infrastructure spending.
Total program expenses were $36.4-billion in the two months, a decrease of about $500-million or 1.4 per cent from the previous year. Employment Insurance transfers dropped 3.3 per cent, while benefits for the elderly increased 2.5 per cent, the report said.
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