Deficit balloons to $28.6B

OTTAWA — Ottawa is past the halfway mark to the biggest deficit in the country’s history, the Finance Department reported Friday.

OTTAWA — Ottawa is past the halfway mark to the biggest deficit in the country’s history, the Finance Department reported Friday.

The department’s monthly fiscal monitor shows that six months into the 2009-10 fiscal year, Ottawa’s deficit has already ballooned to $28.6 billion, adding another $5 billion in September.

That is on pace to meet Finance Minister Jim Flaherty’s latest calculation of a $56.2-billion hole for the fiscal year that ends March 31.

At the corresponding period last year, the government was half a billion in the black, but Ottawa’s fiscal position changed dramatically with the advent of the deep recession that hit the country in October.

The downturn not only resulted in the government increasing spending to stimulate the economy but also severely cut into Ottawa’s revenue stream.

In the first six months, revenues were down $14.2 billion, or 12.3 per cent, reflecting the steep fall-off in income taxes, corporate taxes and GST receipts paid to Ottawa.

Meanwhile, stimulus programs such as cuts to income taxes, increased employment insurance payouts and the auto bailout has cost Ottawa $11 billion in the first six months.

For the month of September, revenues were down $3.6 billion, while program expenses rose $1.1 billion.

“The decline in revenues through September is generally in line with the projected quarterly pattern of economic growth in which nominal gross domestic product, the broadest measure of the tax base, is expected to be weak before strengthening in the October to December timeframe,” the department said.

“The impact of the economic profile on revenue growth highlights the sensitivity of the 2009-10 revenue projections to the economic recovery.”

The biggest hit has come from corporate taxes, which are down almost 40 per cent, or $6.3 billion, in the first six months. Ottawa said it has had to pay about 50 per cent more in refunds to firms on taxes paid in previous years.

As well, receipts from taxes on individuals have dropped 7.5 per cent, or $4.2 billion, reflecting both tax cuts introduced in the January budget and the fact that fewer people working.

Canadians have also paid $2.5 billion, or 17.9 per cent, less in GST than the corresponding period last year.

Meanwhile, spending by the government is up $16.3 billion, or 16.5 per cent over the first half of the fiscal year, with EI payments to newly unemployed workers jumping 50 per cent, or $3.5 billion.

The main positive from the downturn is low interest rates, which has allowed the government to save $1.4 billion in mortgage payments on the $500-billion national debt.

Just Posted

Rural transit service rolled out

2A South Regional Transit will link Innisfail and Penhold with Red Deer

Some Red Deer waste collection schedules change due to holiday season

Tuesday collections will be moved for two weeks

Red Deer ‘champion’ helps hospital by sharing ongoing petition

It’s been about three years since many physicians at Red Deer Regional… Continue reading

Red Deer Airport’s prospects are looking up for 2019

Ultra-low-cost passenger service is on the horizon

Funding down for Red Deer Christmas charities

Food hampers and toys for children going out to those in need

Alberta’s Sundial starts shipping to AGLC this week

Sundial’s Rocky View facility has received the green light from Health Canada… Continue reading

Penny Marshall dead at 75, best known as TV’s Laverne and director of ‘Big,’ ‘A League of Their Own’

Bronx-born Penny Marshall, who found ’70s sitcom success on “Laverne and Shirley”… Continue reading

Chabot scores overtime winner to lift Senators over Predators 4-3

OTTAWA — Thomas Chabot saw an opening and he took it. And… Continue reading

Canadian Marielle Thompson earns World Cup ski cross bronze in season opener

AROSA, Switzerland — Canada’s Marielle Thompson captured bronze at the opening World… Continue reading

Canada doesn’t make Oscars short list for best foreign language film

LOS ANGELES — Canada is no longer in the running for best… Continue reading

Warrant issued for arrest of ‘Schwimmer lookalike’ suspect

LONDON — A British judge has issued an arrest warrant for an… Continue reading

Moneywise: Canadian workers unhappy with pay, want pension plans

Many working Canadians are feeling underpaid and are so worried about their… Continue reading

Brazil police say faith healer has turned himself in

RIO DE JANEIRO — A celebrity faith healer accused of sexually abusing… Continue reading

B.C. hockey coach creates ‘gear library’ to remove cost barrier of sport

VANCOUVER — Nicola Froese says she has always loved playing sports, but… Continue reading

Most Read