Ottawa posts $3.2B deficit for October, up $700M from last year
Without tax changes, income splitting, Ottawa would have posted deficit of $1.6 billion for October
OTTAWA—The federal government said it posted a deficit of $3.2 billion in October due in large part to its new income-splitting plan for families and the doubling of the children’s fitness tax credit.
The result for the month compared with a deficit of $2.5 billion in October 2013.
The tax changes resulted in a $1.6-billion adjustment to revenue and, without that, Ottawa would have posted a deficit of $1.6 billion for October.
The Harper government announced in October it would go ahead with income-splitting plan for couples with children as well as higher child-care benefits.
The income splitting plan has been sharply criticized by the opposition who say the program, which has a price tag of $2 billion annually, would only benefit about 15 per cent of Canadian households.
For October, the Finance Department said revenue was down by $200 million or 0.9 per cent compared with a year ago due to the tax changes, partially offset by increased corporate income tax revenue.
Program spending for the month was up by $600 million or 3.1 per cent, while public debt charges decreased by $100 million or 3.4 per cent.
In its fall economic update, the federal government said last month it expected to post a deficit of $2.9 billion for 2014-15 and a $1.6-billion surplus in the 2015-16 fiscal year.
Prime Minister Stephen Harper has said the falling price of oil will reduce some federal fiscal flexibility, but that it will balance the budget next year.
For the current fiscal year to date, the government posted a deficit of $4 billion, compared with a deficit of $12.8 billion in the same period a year ago.
Revenue for the period from April to October increased $5.3 billion, or 3.7 per cent, to $150.3 billion while program spending fell $3.2 billion, or 2.3 per cent, to $137.7 billion.
Public debt charges dropped to $16.5 billion from $16.9 billion for the comparable seven-month periods.