The monthly budget surplus that Canada usually records disappeared in October as the tax cuts announced in that month's economic statement were added into the mix.

The treasury ran a $2.7 billion deficit in October, the Finance department announced Friday. That compared to a $500-million surplus in the same month a year earlier.

The adjustment reduced the year-to-date surplus to $6.6 billion, from $9.3 billion in September.

The Conservative government's Oct. 30 economic statement brought in a couple of tax cuts that were retroactive to the start of the year — one cut the lowest personal income tax rate from 15.5 per cent to 15 per cent; the other raised the amount you were allowed to earn before paying tax.

Those two measures helped lead to a $1.7 billion reduction in budgetary revenues. "A decline in personal income tax revenues from this adjustment was partially offset by gains in corporate income tax revenues and other revenues," the finance department said.

Program expenses rose by $1.7 billion. That was due to higher transfer payments and departmental spending. 

Despite October's deficit, the country is still likely to end the 2007-08 fiscal year with a surplus.

The finance department said even with the tax cuts announced on Oct. 30, the country should have an underlying budget surplus of $11.6 billion in the current fiscal year. Ottawa is planning to use $10 billion of that to pay down the federal debt. That would leave a net surplus of $1.6 billion.