OTTAWA (Reuters) - Canada had bigger budget deficits in July and in the April-July period than it did in the same periods last year due to a sharp drop in corporate income tax revenues, which the government said would be reversed in August.
The federal budget deficit widened to C$1.98 billion ($1.92 billion) in July, compared with a shortfall of C$1.35 billion in July 2012, the Department of Finance said on Friday in a monthly report. The government ran a C$158 million surplus in the month of June.
Revenues from corporate income taxes plunged 73.7 percent in July, down C$1.3 billion, “reflecting timing issues which lowered July revenues but are expected to raise August revenues,” the government said.
The government’s books will take into account some July corporate income tax revenues in August, unlike last year, a finance ministry spokesman said.
Overall, revenues fell 2.6 percent in the month to C$19.8 billion, while program expenses clawed 0.1 percent higher to C$19.3 billion. Public debt charges increased by C$0.1 billion, or 3.8 percent in the month.
In the first four months of the fiscal year, from April to July, the deficit stood at C$4.54 billion, up from C$4.16 billion a year earlier.
Revenues rose 2.6 percent, compared with a 3.4 percent rise in expenses. The hit in July to corporate income tax collection offset big gains in revenues from personal income taxes and employment insurance premiums.
The Conservative government has promised to eliminate the deficit by 2015, and has predicted a budget shortfall in 2013-14 of C$18.7 billion, equivalent to 1 percent of gross domestic product.
It plans to do that without any major policy shifts or spending cuts, Finance Minister Jim Flaherty said in August.
Editing by Jeffrey Hodgson; and Peter Galloway