Corporate taxes plunge as Ottawa’s deficit rises

OTTAWA — A major drop in tax receipts from corporations is helping push the federal government into the biggest deficit in its history, the latest fiscal reporting from the Finance Department shows.

OTTAWA — A major drop in tax receipts from corporations is helping push the federal government into the biggest deficit in its history, the latest fiscal reporting from the Finance Department shows.

The recession is hitting the federal government in all areas, but none so dramatically as with the corporate sector, where taxes collected so far this year are down 37 per cent in comparison with last year.

The $6.6-billion shortfall from business taxes is actually more than the $4.9-billion decrease the government has seen in personal taxes, which represent a far bigger slice of the revenue pie.

Overall, Ottawa reported Friday it was roughly in line with meeting its projection of a record $56.2-billion deficit.

For the first seven months of the fiscal year, which ends March 31, 2010, the department said Ottawa is now $31.9 billion in the red, as opposed to the relatively thin, $100-million shortfall it was experiencing at this time last year.

The October shortfall was $3.3 billion.

Although $12 billion of the year-to-date shortfall is due to measures Ottawa introduced last January to combat the recession, it blames the majority of the deficit on falling revenues and rising program costs.

Revenues are down $16.1 billion, or close to 12 per cent, as receipts from corporate, personal and the goods and services tax declined.

The loss from corporate taxes represents 41 per cent of the total revenue hit experienced by the government so far this year.

The department said almost half of the lost revenue stream comes from Ottawa having to reimburse firms for collected taxes after profits failed to materialize.

Program expenses are also eroding the government’s fiscal position, with the biggest change stemming from supporting the growing number of unemployed.

More than 400,000 jobs have been lost in the recession, and hundreds of thousands more employees saw their work hours reduced.

The department said Ottawa paid out $3.9 billion more on employment insurance benefits in the first seven months of this fiscal year than last, an increase of 48.7 per cent.

Overall, program expenses were up $17.4 billion, reflecting increased payouts to the elderly, major transfer payments to provinces, the auto bailout, and costs associated with stimulus measures.

Although the government debt is increasing, the cost of servicing the debt actually fell by $1.5 billion because of super-low interest rates.

Ottawa also reported Friday that total transfers to provinces and territories will increase by $2.4 billion in 2010-11, to bring total federal support to $54.4 billion,

Equalization payments to provinces for 2010-11 will total $14.4 billion, an increase of $187 million.

The Canada Health Transfer will grow to $25.4 billion, while the Canada Social Transfer will total $11.2 billion.

Territorial formula financing will amount to $2.7 billion.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Heather Buelow, owner of Aerial Edge Studio in Blackfalds, says she has spent all of her savings to keep the studio going through government-mandated shutdowns during the COVID-19 pandemic. (Contributed photo)
Either open in-person or close permanently: Central Alberta yoga studio defying rules

A central Alberta woman is allowing clients back into her traditional and… Continue reading

(MaxPixel)
Sandra Schmirler Foundation donates $10,000 to Red Deer hospital

Donation will go towards electronic fetal heart monitoring project

A sustainability audit for Westerner Park suggested 33 changes, including more city involvement. (Advocate file photo)
Westerner Park expands volunteer program

As Westerner Park refocuses the organization, they are reigniting their emphasis on… Continue reading

Ukraine’s leader requests a talk with Putin, gets no answer

Ukraine’s leader requests a talk with Putin, gets no answer

Madelyn Boyko poses along with a number of the bath bombs she makes with her mom, Jessica Boyko. Madelyn says she enjoys making the bath bombs with her mom as it is a special time for just the two of them. (Photo Submitted)
5-year-old Sylvan Lake girl selling bath bombs in support of younger brother

Madelyn Boyko is selling bath bombs for CdLS research in honour of her younger brother

Minister of Public Safety and Emergency Preparedness Bill Blair responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on December 11, 2020. THE CANADIAN PRESS/Patrick Doyle
New regulator to stop sexual exploitation of children online: public safety minister

OTTAWA — Public Safety Minister Bill Blair says the government will introduce… Continue reading

Gordon Greenwood Elementary Grade 7 students were assigned to write about climate change. The Langley Advance Times is pleased to present a selection of their writings. (Sasha/Special to the Langley Advance Times)
Canada’s greenhouse gas emissions increased slightly in 2019: report

OTTAWA — A new report shows Canada’s greenhouse gas emissions increased slightly… Continue reading

Conservative leader Erin O'Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
O’Toole to vote against Conservative MP’s private bill on ‘sex-selective abortion’

OTTAWA — Conservative Leader Erin O’Toole says he will vote against a… Continue reading

Eugene Kwon of Gratia Bakery and Cafe says the business will be relying on take out orders and a small patio. (Neil Corbett/The News)
Small business struggling amid COVID-19 pandemic looks for aid in Liberals’ budget

OTTAWA — A group representing thousands of the country’s small businesses says… Continue reading

Ron Howard is photographed at the "Inferno" film premiere on Oct. 25, 2016 in Los Angeles. (Buckner/Rex Shutterstock/Zuma Press/TNS)
Brothers Ron and Clint Howard have memoir coming in October

NEW YORK — Filmmaker-actor Ron Howard and actor Clint Howard, brothers, former… Continue reading

FILE - In this Saturday, March 27, 2021 file photo, Buffalo Sabres’ Taylor Hall plays against the Boston Bruins during the second period of an NHL hockey game, in Boston. The Buffalo Sabres could trade 2018 MVP Hall, who signed for just this season and is a pending free agent. (AP Photo/Michael Dwyer, File)
Boston Bruins acquire Taylor Hall to kick off NHL trade deadline day

Trade deadline day in the NHL has started with the Boston Bruins… Continue reading

Most Read