Preliminary $12.1 billion deficit for year puts Ottawa ahead of budget pace

OTTAWA – Higher tax revenues helped lift the federal treasury to the best fiscal position since the recession, putting the Harper government on track to eliminate the deficit within a year.

The Finance Department said Friday its preliminary calculation of the just completed fiscal year shows the deficit shrinking by more than $6 billion to $12.1 billion.

Although the final number won’t be known for some time, the current standing puts the Conservative government well ahead of pace to beat the budgeted deficit for the year of $16.6 billion.

As expected, the final month of the fiscal year, March, saw a huge deficit of $6.7 billion after three consecutive monthly surpluses, but that did not detract from what has been a positive year for the Harper government in its efforts to return to a balanced budget.

After posting an $18.7 billion deficit in 2012-13, analysts now expect this year’s shortfall will shrink to the $12-billion range.

Finance Minister Joe Oliver said this week he is confident he will be operating in surplus by the time he tables his first budget next spring, and the last before the anticipated 2015 election campaign. Previously, he estimated he could have as much as $9 billion to play with.

Returning to surplus is critical for the Harper Conservatives since it would allow them to finally fulfil an election pledge of four years ago and introduce income splitting or other tax cuts in time for the next campaign, expected in the fall of 2015.

The government has taken great pride in its ability to have reduced taxes even at a time of recession and slow growth, while maintaining a relatively healthy fiscal position. It was helped by a Parliamentary Budget Officer report this week, which calculated taxes on Canadians had been cut by over $30 billion since 2005.

In Friday’s report, the Finance Department attributed the improved fiscal position to a strong 5.2 per cent pick up in tax revenues — amounting to a $13.2 billion gain over last year. Most of the revenue increases came from personal taxes and GST receipts.

Program expenses also rose, but at a more moderate 2.8 per cent pace, or $6.8 billion more than last year.

Public debt charges were down about $176 million.

For March alone, revenues increased 10.7 per cent over March 2013, and program expenses rose 3.9 per cent. The deficit last March was $8.0 billion.