Canada’s Budget Deficit Triples in July to C$1.6 Billion

Canada’s federal budget deficit more than tripled in July from a year earlier, on falling revenue from corporate and sales taxes, according to a statement released today by Canada’s finance department.

The federal deficit widened during the month to C$1.6 billion ($1.54 billion), from C$473 million a year earlier. Revenue from corporate income taxes fell 13 percent to C$2.2 billion, while income from the federal sales tax was down 13 percent to C$2.63 billion. The deficit for the first four months of the fiscal year that began April 1 narrowed to C$7.1 billion from C$7.7 billion as income tax revenue increased 6.6 percent.

Canadian Finance Minister Jim Flaherty has said the government’s fiscal projections for the current year remain consistent with forecasts even amid indications the economy has slowed. The government has benefited from higher tax revenue from personal income taxes and a job market that is driving up employment insurance premiums and reducing benefits.

The finance department didn’t say why corporate income taxes fell in July.

Flaherty released a fiscal plan in June that seeks to balance the budget by 2014 through government operating cost cuts of up to C$4 billion annually, and by closing tax loopholes.

Canada projects a deficit of C$32.3 billion this year, from C$36.2 billion for the fiscal year that ended in March.

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net