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In April and May | Ottawa recorded a combined surplus of $5.3 billion

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Maria Gill
Maria Gill
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(Ottawa) The federal deficit could melt like snow in the sun in 2022-2023, thanks to the good performance of the Canadian economy and high inflation.

Posted on August 3

Joel Dennis Belavance

Joel Dennis Belavance

During the first two months of the current fiscal year, the federal government unexpectedly posted a surplus of $5.3 billion, compared to a deficit of $23.8 billion during the first two months of the previous fiscal year, reveals the Commerce Department’s latest financial review. Finance.

This is a stunning turnaround in Ottawa’s state of public finances, indicating a shortfall well below the $54 billion projected in the previous budget, presented by Minister Chrystia Freeland on April 7.

MI Freeland then projected a deficit of $52.8 billion for the entire 2022-23 fiscal year. But if the trend continues, it could melt like snow in the sun and reach just 16 billion, according to Finances of the Nation, an organization that closely tracks the evolution of federal and provincial finances.

The $16 billion shortfall would be a much lower budget than projected.

Trevor Tombe, Professor of Economics at the University of Calgary, who is involved in the nation’s finance business

A return to balanced budgets also appears possible after years of red-inked budgets if the Trudeau government imposes greater budget discipline and does not plunge the Canadian economy into a deep recession.

At the height of the economic crisis caused by the COVID-19 pandemic, the federal government posted a record $327 billion shortfall in 2020-2021 to fund, in particular, emergency aid programs to support families, workers, and businesses during health. crisis. The deficit then stabilized at 113.8 billion in 2021-2022.

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Significant increase in revenue

During the first two months of the current fiscal year, federal tax authorities generated $71.7 billion in revenue, an increase of $12.1 billion (20.3%) over the same period in 2021-2022. The end of dismantling and inflation measures explains this sharp increase in income.

Revenue from GST increased 29.4% during the first two months of the fiscal year compared to the same period in the previous fiscal year, rising from $7.4 billion to $9.6 billion. Revenue from this tax, which applies to goods and services, is likely to rise rapidly when inflation rises. Inflation reached 8.1% in June, its highest level in nearly 40 years.

The government’s financial results for 2022-23 continue to show improvement from the most severe point of the pandemic and the unprecedented level of temporary support measures for COVID-19 taken at that time.

Adrienne Vaupshas, ​​Press Secretary to the Minister of Finance

However, a government source noted that during the first three years of the Liberals’ rule (2015-2016, 2016-2017 and 2018-2019), Ottawa also posted a surplus in May, but we still finished each of those years. . in deficit because expenditures are generally directed towards the end of the fiscal year.

In fact, large payments due at the end of the fiscal year were not applied for the first two months, including payments related to early learning and childcare, community development in Canada, home care and mental health, among others.

Conservatives and the Québecco bloc criticize

The Conservative Party says these financial results show the Trudeau government is making extra money on the backs of families struggling to make ends meet due to the rising cost of living.

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“That’s exactly what we were expecting. We knew the government was going to raise extra money, mainly because of inflation. That’s why he was asked to help Canadians who have to pay more for everything. We wanted him to introduce the Goods and Services Tax (GST) holiday. , to offer a reprieve on the increase in the carbon tax. “But he refused each time to pay his out-of-control expenditures and meet the NDP’s wishes,” said Tory deputy leader Luke Berthold.

The Quebecoa block was also decisive. Liberals who have watched the inflationary storm pass for months and refuse to lift a finger now have no excuses. This budget surplus, explained largely by the increase in revenue associated with inflation, proves that the federal government not only has the leeway to adequately fund our health care system, but it also has the means to give a little more weight to citizens who must tighten their belts more than ever”, argued Representative Gabriel Ste-Marie, Quebecoa Bloc financial critic.

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