Federal deficit expands to $3.6B as family tax cuts eat into revenues
The federal government's monthly deficit expanded to $3.2 billion in October, about $700 million higher than the same month a year ago.
According to the latest data released by the federal government on Monday, much of the increase can be attributed to the implementation of the Family Tax Credit and the doubling of the Children’s Fitness Tax Credit.
Those were two tax cuts the government announced this fall that will retroactively cover the entire 2014 tax year. As it stands, Ottawa reckons the cost of those moves will ultimately reduce government revenues by about $1.6 billion over the ten months between January and October — although the final tally won't be known until Canadians pay their income taxes in the spring and Ottawa can properly quantify the impact.
"Absent this adjustment, there would have been a deficit of $1.6 billion in October 2014," the government said Monday.
All in all, Ottawa took in revenue of $19.8 billion during the month, down $0.2 billion, or 0.9 per cent, from October of last year. At the same time, expenses were $20.8 billion, up $0.6 billion, or 3.1 per cent, from October 2013's level.
Revenues from corporate taxes, non-resident income taxes, excise duties, GST revenues and EI premiums all increased. But Ottawa also spent more, as transfer to individuals, other levels of government and direct program expenses were also higher.
Ottawa's fiscal year begins on April 1. So far for this fiscal year, Ottawa has posted a budgetary deficit of $4 billion, compared with a deficit of $12.8 billion reported in the same period last year.
"The government remains on track to balance the budget in 2015," the Department of Finance said in the release.