Fiscal Monitor for December 2017



Among the documents released on budget day was the Fiscal Monitor for December 2017. The federal government posted a budgetary surplus of $565 million in December 2017, compared to deficit of $1.3 billion in December 2016.

The improvement of $1.9 billion in the budgetary balance primarily resulted from higher personal income tax revenues, up 14.1%, and higher corporate income tax revenues, up 23.3%. The latter primarily reflects the year-end filings of those financial institutions with a taxation year ending October 30th. They have 30 days to submit their taxes owing. Dampening these increases were lower GST revenues, down 18.4%, and lower employment insurance premiums, down 12.7%, reflecting a decline in premium rates in 2017.Program expenses were up 5%, reflecting increases in all major components.  Public debt charges were slightly lower.

For the first nine months of fiscal year 2017-18, the federal government recorded a deficit of $8.6 billion, compared to a deficit of $14.0 billion for the same period in 2016-17.  Budgetary revenues were up $11.6 billion (5.5%) compared to the same period last year.  Program expenses were up $6.7 billion, or 3.2% in the first nine months of 2017-18, compared to the same period last year.  Public debt charges were down $505 million or 2.7%.

Within budgetary revenues, personal income tax revenues were up $6.9 billion (6.8%). Corporate income tax revenues were up $2.8 billion or 9.7%. Sales and excise taxes were up $2.2 billion or 5.5%. Employment insurance premium contributions declined $1.8 billion or -12.0%, reflecting the decline in premium rates for 2017.  Other revenues, consisting of net profits from enterprise Crown corporations, revenues from consolidated Crown corporations, revenues from the sale of goods and services, returns on investments, net foreign exchange and miscellaneous revenues were up $638 million (3.2%). The increase in budgetary revenues of 5.5% to date is consistent with the increase forecast in the 2018 Budget for the year as a whole.

Within program expenses, major transfers to persons rose $2.7 billion (4.1%). Elderly benefits were up $2.0 billion or 5.5%, attributable to an increase in average benefits which are indexed quarterly to the CPI and an increase in the eligible population. Children’s benefits were up $1.3 billion or 8.3% due to the replacement of the Universal Child Care Benefit by the Canada Child Benefit. Employment insurance benefits declined $0.6 billion (-4.1%), reflecting a decline in regular benefits.
Major transfers to other levels of government were up $1.6 billion (3.2%) compared to the same period last year, primarily reflecting legislated increases in the various components. 

Direct program expenses increased by $2.3 billion (2.6%). Other transfers and subsidies declined $295 million, or 1.1%, primarily reflecting the reprofiling of infrastructure spending to outer years. Crown corporation expenses were up $571 million, or 8.2%, while defence expenses rose $1.3 billion, or 7.0%. All other departmental and agency expenses increased by $775 million, or 2.2%.

Public debt charges were $506 million lower (2.7%), largely reflecting lower CPI adjustments on Real Return Bonds.
Budget 2018 forecast a deficit of $19.4 billion for the year as a whole. This includes accrual adjustments of $6.2 billion, primarily related to veterans’ benefits. Without these year-end accrual adjustments, the deficit for 2017-18 would be $13.2 billion, well below the deficit of $17.8 billion reported for 2016-17.

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