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- Fiscal Monitor 2005 -
The Fiscal Monitor
Highlights of financial results for July 2005
Highlights
July 2005: budgetary surplus of $2.3 billion
There was a budgetary surplus of $2.3 billion in July
2005, $0.9 billion higher than the surplus of $1.4 billion reported in
July 2004. This year-over-year improvement in the budgetary surplus is
attributable to higher revenues, up $1.7 billion, or 10.4 per cent,
compared to the same period last year. Program expenses rose $1.0
billion, or 9.0 per cent, primarily reflecting higher transfer
payments, in particular higher transfers to the provinces and
territories as specified under the 2004 agreements on health care and
equalization/Territorial Formula Financing (TFF). Public debt charges
declined by $0.2 billion.
April to July 2005: budgetary surplus of $7.1 billion
For the first four months of the 2005–06 fiscal year
(April to July), the budgetary surplus is estimated at $7.1 billion,
up $2.8 billion from the $4.3-billion surplus reported in the same
period last year.
Budgetary revenues were up $7.1 billion, or 11.5 per
cent, reflecting strong year-over-year gains in personal and corporate
income tax receipts. Strong year-to-date growth in personal income tax
receipts is due to higher source deductions from employment income,
which are currently growing at about twice the rate of the estimated
growth in wages and salaries. Higher corporate income tax receipts in
part reflect timing factors related to corporate remittance
procedures, which will unwind as the year progresses. Program expenses
were up $4.6 billion, or 10.2 per cent, primarily due to higher
transfers to the provinces and territories for health care and
equalization/TFF. Public debt charges were $0.4 billion lower.
The monthly financial results for the first part
of the year are variable. Caution should be exercised in using these
results to project the outcome for the year as a whole. A complete
update of the fiscal outlook for 2005–06 and future years will be
provided later this fall. |
July 2005
There was a budgetary surplus of $2.3 billion in July 2005,
up $0.9 billion from the $1.4-billion surplus reported during the same month
last year.
Budgetary revenues totalled $17.7 billion, an increase of
$1.7 billion, or 10.4 per cent, from July 2004. Gains primarily reflect
higher income tax receipts.
- Personal income tax revenues were up $1.1 billion, or
14.5 per cent, due to strong growth in source deductions from employment
income.
- Corporate income tax revenues increased by $0.1 billion,
or 5.2 per cent, reflecting ongoing gains in profits.
- Excise taxes and duties declined $225 million, or 5.6
per cent. Goods and services tax (GST) revenues declined 0.3 per cent as a
result of higher refunds. Customs import duties were down $68 million, while
sales and excise taxes were $144 million lower. Revenues from the Air
Travellers Security Charge were $4 million lower, reflecting the reductions
in the charge, as announced in the 2005 budget.
- Employment insurance (EI) premiums were down slightly,
falling 0.4 per cent.
- Other revenues, consisting of revenues from Crown
corporations, sales of goods and services and foreign exchange revenues,
were up $553 million, or 59.7 per cent. Other revenues are volatile on a
monthly basis.
On a year-over-year basis, program expenses in July 2005
were $12.6 billion, up $1.0 billion or 9.0 per cent from July 2004, due
mainly to higher transfer payments.
Transfer payments were $0.6 billion or 8.1 per cent higher.
- Major transfers to persons, consisting of elderly and EI
benefits, were up $224 million, or 6.9 per cent, on a year-over-year basis.
Elderly benefits increased 4.3 per cent due to both higher average benefits
and an increase in the number of individuals eligible for benefits. EI
benefit payments increased by 12.8 per cent, primarily due to an increase in
special benefits, such as sickness and paternal benefits, reflecting
differences in the timing of payments between July 2005 and July 2004.
- Major transfers to other levels of government,
consisting of federal transfers in support of health and other social
programs (Canada Health Transfer and Canada Social Transfer), fiscal
transfers and Alternative Payments for Standing Programs, were up $0.3
billion, or 12.2 per cent. The increase in federal transfers in support of
health and other social programs reflects increased funding under the 2004
agreement on health care.
- Subsidies and other transfers increased by 2.8 per cent.
Other program expenses consist of transfers to Crown
corporations and operating expenses for departments and agencies, including
defence. On a year-over-year basis, these expenses were up $0.5 billion, or
10.2 per cent, reflecting increased operating costs and the impact of
previous budget measures. This component is quite volatile on a monthly
basis, reflecting the timing of payments and the coming into force of budget
measures.
Public debt charges decreased by $0.2 billion, or 7.6 per
cent, due to both a decline in the stock of interest-bearing debt and a
decline in the average effective interest rate on that debt.
April to July 2005
In the first four months of the 2005–06 fiscal year, there
was a budgetary surplus of $7.1 billion, up $2.8 billion from the surplus of
$4.3 billion reported in the same period of 2004–05.
Budgetary revenues, at $68.6 billion, were up $7.1 billion, or 11.5 per
cent.
- Personal income tax revenues increased by $3.0 billion, or 10.6 per
cent, much higher than the estimated growth in wages and salaries of
about 5 per cent during the period. The year-over-year increase is
largely attributable to the growth in source deductions from employment
income.
- Corporate income tax revenues were up $2.1 billion, or 27.3 per cent,
over the last year, or more than double the growth rate of corporate
profits. This gain is in part due to the procedures under which
corporations are required to remit monthly instalments. Corporations
make monthly tax instalment payments based on either their previous year’s
actual tax liability or their current year’s estimated liability, with
any differences made up within 60 days of the close of their taxation
year. During 2004–05, most corporations based their instalments on
their 2003 tax liabilities. However, profits increased by nearly 20 per
cent in 2004, resulting in large settlement payments in the final
quarter of 2004–05. With monthly instalments in 2005 now based on 2004
tax liabilities, but instalments through July 2004 reflecting 2003
liabilities, the growth in corporate receipts so far this year
overstates the underlying growth in corporate income tax revenues. This
year-to-date growth will moderate when the settlement payments are
received at the end of the 2005–06 fiscal year.
- Excise taxes and duties increased by $0.9 billion, or 6.3 per cent.
GST revenues increased by $0.9 billion, or 9.0 per cent, well above the
growth of the applicable tax base, due to higher gross receipts from
domestic sales and on imports and a somewhat slower pace of refunds.
Sales and excise taxes were down 0.9 per cent, while the Air Travellers
Security Charge was down 8.4 per cent.
- EI premiums were up 2.0 per cent, as the increase in the number of
people employed more than offset the impact of the reduction in premium
rates.
- Other revenues were up 19.4 per cent.
On a year-over-year basis, program expenses in the April to July 2005
period, at $50.2 billion, were up $4.6 billion, or 10.2 per cent, over the
same period of 2004–05, with most of the increase attributable to higher
transfers to the provinces and territories for health care and equalization/TFF.
Public debt charges declined by $0.4 billion.
Transfer payments, which accounted for nearly two-thirds of total program
expenses, increased by $3.5 billion, or 12.2 per cent.
- Transfers to persons advanced by 3.5 per cent. Elderly benefits were
up 4.9 per cent, while EI benefits were up 0.7 per cent. Within EI
benefits, regular benefit payments were lower, reflecting the improved
labour market situation, while special benefits were higher.
- Transfers to other levels of government were up $2.2 billion, or 22.1
per cent, reflecting the impact of the 2004 agreement on health care and
the new framework for equalization/TFF.
- Subsidies and other transfers increased by 15.6 per cent, reflecting
the impact of previous budget measures.
Other program expenses increased by 6.8 per cent due to increases in
departmental operating costs. Crown corporation expenses were virtually
unchanged.
The decline in public debt charges is attributable to a decline in the
stock of interest-bearing debt and a decline in the average effective
interest rate on that debt.
Financial requirement of $5.4 billion for April to July 2005
The budgetary balance is presented on a full accrual basis of accounting,
recording government assets and liabilities when they are receivable or
incurred, regardless of when the cash is received or paid. In contrast, the
financial source/requirement measures the difference between cash coming in
to the Government and cash going out. This measure is affected not only by
changes in the budgetary balance but also by the cash source/requirement
resulting from the Government’s investing activities through its
acquisition of capital assets and its loans, financial investments and
advances, as well as from other activities, including payment of accounts
payable and collection of accounts receivable, foreign exchange activities,
and the amortization of its tangible capital assets. The difference between
the budgetary balance and financial source/requirement is recorded in
non-budgetary transactions.
Non-budgetary transactions resulted in a net requirement of $12.5 billion
in the April-to-July period, up $2.4 billion from the requirement in the
same period of 2004–05. This increase reflects the $2.8-billion transfer
to the provinces of Nova Scotia and Newfoundland and Labrador under the
offshore revenue agreements.
With a budgetary surplus of $7.1 billion and a net requirement of $12.5
billion from non-budgetary transactions, there was a financial requirement
of $5.4 billion in the first four months of 2005–06, down $0.4 billion
from the same period last year.
Net financing activities down $8.4 billion
The Government’s market debt was down $8.4 billion by the end of July
2005, with all components being lower. To finance the financial requirement
of $5.4 billion and the reduction of market debt, the Government reduced its
cash balances by $13.8 billion. The level of cash balances varies from month
to month based on a number of factors including periodic large debt
maturities, which can be quite volatile on a monthly basis. Cash balances at
the end of July stood at $3.4 billion.
Table 1
Summary statement of transactions
|
|
July |
April
to July |
|
|
|
|
2004 |
2005 |
2004–05 |
2005–06 |
|
|
($
millions) |
Budgetary
transactions |
|
|
|
|
Revenues |
16,051 |
17,715 |
61,552 |
68,602 |
Expenses |
|
|
|
|
Program
expenses |
-11,598 |
-12,638 |
-45,532 |
-50,176 |
Public
debt charges |
-3,031 |
-2,801 |
-11,696 |
-11,319 |
|
|
|
Budgetary
balance (deficit/surplus) |
1,422 |
2,276 |
4,324 |
7,107 |
Non-budgetary
transactions |
-68 |
-2,272 |
-10,153 |
-12,508 |
Financial
source/requirement |
1,354 |
4 |
-5,829 |
-5,401 |
Net
change in financing activities |
807 |
-84 |
-6,995 |
-8,361 |
Net
change in cash balances |
2,161 |
-80 |
-12,824 |
-13,762 |
Cash
balance at end of period |
|
|
4,425 |
3,361 |
|
Note:
Positive numbers indicate net source of funds. Negative numbers
indicate net requirement for funds. |
Table 2
Budgetary revenues
|
|
July |
|
April
to July |
|
|
|
|
|
|
|
2004 |
2005 |
Change |
2004–05 |
2005–06 |
Change |
|
|
($
millions) |
(%) |
($
millions) |
(%) |
Tax
revenues |
|
|
|
|
|
|
Income
taxes |
|
|
|
|
|
|
Personal
income tax |
7,453 |
8,536 |
14.5 |
28,265 |
31,253 |
10.6 |
Corporate
income tax |
1,899 |
1,997 |
5.2 |
7,600 |
9,677 |
27.3 |
Other
income tax revenue |
266 |
427 |
60.5 |
1,101 |
1,315 |
19.4 |
|
|
|
Total
income tax |
9,618 |
10,960 |
14.0 |
36,966 |
42,245 |
14.3 |
Excise
taxes and duties |
|
|
|
|
|
|
Goods
and services tax |
2,728 |
2,719 |
-0.3 |
10,013 |
10,914 |
9.0 |
Customs
import duties |
317 |
249 |
-21.5 |
995 |
1,046 |
5.1 |
Sales
and excise taxes |
960 |
816 |
-15.0 |
3,250 |
3,221 |
-0.9 |
Air
Travellers Security Charge |
35 |
31 |
-11.4 |
131 |
120 |
-8.4 |
|
|
|
Total
excise taxes and duties |
4,040 |
3,815 |
-5.6 |
14,389 |
15,301 |
6.3 |
|
|
|
Total
tax revenues |
13,658 |
14,775 |
8.2 |
51,355 |
57,546 |
12.1 |
Employment
insurance premiums |
1,466 |
1,460 |
-0.4 |
6,438 |
6,566 |
2.0 |
Other
revenues |
927 |
1,480 |
59.7 |
3,759 |
4,490 |
19.4 |
Total
budgetary revenues |
16,051 |
17,715 |
10.4 |
61,552 |
68,602 |
11.5 |
|
Note:
Totals may not sum due to rounding. |
Table 3
Budgetary expenses
|
|
July |
|
April to July |
|
|
|
|
|
|
|
2004 |
2005 |
Change |
2004–05 |
2005–06 |
Change |
|
|
($ millions) |
(%) |
($ millions) |
(%) |
Transfer payments |
|
|
|
|
|
|
Transfers to persons |
|
|
|
|
|
|
Elderly benefits |
2,273 |
2,371 |
4.3 |
9,127 |
9,574 |
4.9 |
Employment insurance benefits |
981 |
1,107 |
12.8 |
4,597 |
4,628 |
0.7 |
|
|
|
Total |
3,254 |
3,478 |
6.9 |
13,724 |
14,202 |
3.5 |
Transfers to other levels of government |
|
|
|
|
|
|
Support for health and other social
programs |
|
|
|
|
|
|
Canada Health Transfer |
1,054 |
1,583 |
|
4,217 |
6,333 |
|
Canada Social Transfer |
652 |
685 |
|
2,608 |
2,742 |
|
Health Reform Transfer |
125 |
0 |
|
500 |
0 |
|
Canada Health and Social Transfer |
0 |
0 |
|
25 |
0 |
|
|
|
|
Total |
1,831 |
2,268 |
23.9 |
7,350 |
9,075 |
23.5 |
Fiscal transfers |
943 |
831 |
-11.9 |
3,790 |
4,330 |
14.2 |
Alternative Payments for Standing Programs |
-225 |
-239 |
6.2 |
-984 |
-1,001 |
1.7 |
|
|
|
Total |
2,549 |
2,860 |
12.2 |
10,156 |
12,404 |
22.1 |
Subsidies and other transfers |
|
|
|
|
|
|
Agriculture |
29 |
-55 |
-289.7 |
153 |
393 |
156.9 |
Foreign Affairs |
151 |
173 |
14.6 |
727 |
680 |
-6.5 |
Health |
233 |
211 |
-9.4 |
608 |
621 |
2.1 |
Human Resources Development |
88 |
103 |
17.0 |
492 |
393 |
-20.1 |
Indian and Northern Development |
340 |
316 |
-7.1 |
1,552 |
1,646 |
6.1 |
Industry and Regional Development |
131 |
147 |
12.2 |
495 |
575 |
16.2 |
Other |
215 |
325 |
51.2 |
1,072 |
1,587 |
48.0 |
|
|
|
Total |
1,187 |
1,220 |
2.8 |
5,099 |
5,895 |
15.6 |
|
|
|
Total transfer payments |
6,990 |
7,558 |
8.1 |
28,979 |
32,501 |
12.2 |
Other program expenses |
|
|
|
|
|
|
Crown corporation expenses |
|
|
|
|
|
|
Canadian Broadcasting Corporation |
94 |
100 |
6.4 |
460 |
455 |
-1.1 |
Canada Mortgage and Housing Corporation |
170 |
186 |
9.4 |
725 |
704 |
-2.9 |
Other |
122 |
211 |
73.0 |
701 |
733 |
4.6 |
|
|
|
Total |
386 |
497 |
28.8 |
1,886 |
1,892 |
0.3 |
Defence |
1,120 |
1,566 |
39.8 |
3,768 |
4,444 |
17.9 |
All other departments and agencies |
3,102 |
3,017 |
-2.7 |
10,899 |
11,339 |
4.0 |
|
|
|
Total other program expenses |
4,608 |
5,080 |
10.2 |
16,553 |
17,675 |
6.8 |
Total program expenses |
11,598 |
12,638 |
9.0 |
45,532 |
50,176 |
10.2 |
Public debt charges |
3,031 |
2,801 |
-7.6 |
11,696 |
11,319 |
-3.2 |
Total budgetary expenses |
14,629 |
15,439 |
5.5 |
57,228 |
61,495 |
7.5 |
|
Note: Totals may not sum due to rounding. |
Table 4
Budgetary balance and financial source/requirement
|
|
July |
April to July |
|
|
|
|
2004 |
2005 |
2004–05 |
2005–06 |
|
($ millions) |
Budgetary balance (deficit/surplus) |
1,422 |
2,276 |
4,324 |
7,107 |
Non-budgetary transactions |
|
|
|
|
Capital investing activities |
-19 |
178 |
-272 |
19 |
Other investing activities |
-264 |
-595 |
-356 |
-1,331 |
Pension and other accounts |
-636 |
-305 |
-307 |
-1,241 |
Other activities |
|
|
|
|
Accounts payable, receivables, accruals
and
allowances |
489 |
-3,491 |
-10,503 |
-13,216 |
Foreign exchange activities |
104 |
1,679 |
279 |
2,268 |
Amortization of tangible capital assets |
258 |
262 |
1,006 |
993 |
|
|
|
Total other activities |
851 |
-1,550 |
-9,218 |
-9,955 |
Total non-budgetary transactions |
-68 |
-2,272 |
-10,153 |
-12,508 |
Net financial source/requirement |
1,354 |
4 |
-5,829 |
-5,401 |
|
Note: Totals may not sum due to rounding. |
Table 5
Financial source/requirement and net financing activities
|
|
July |
April to July |
|
|
|
|
2004 |
2005 |
2004–05 |
2005–06 |
|
|
($ millions) |
Net financial
source/requirement |
1,354 |
4 |
-5,829 |
-5,401 |
Net increase (+)/decrease (-) in
financing activities |
|
|
|
|
Unmatured debt
transactions |
|
|
|
|
Canadian
currency borrowings |
|
|
|
|
Marketable
bonds |
278 |
758 |
-7,432 |
-878 |
Treasury
bills |
1,000 |
1,300 |
1,800 |
-3,600 |
Canada
Savings Bonds |
-61 |
-88 |
-183 |
-308 |
Other |
-5 |
-2 |
-19 |
-141 |
|
|
|
Total |
1,212 |
1,968 |
-5,834 |
-4,927 |
Foreign
currency borrowings |
-391 |
-2,125 |
-1,133 |
-3,504 |
|
|
|
Total |
821 |
-157 |
-6,967 |
-8,431 |
Obligations
related to capital leases |
-14 |
73 |
-28 |
70 |
Net change in
financing activities |
807 |
-84 |
-6,995 |
-8,361 |
Change in cash balance |
2,161 |
-80 |
-12,824 |
-13,762 |
|
Note: Totals may not sum due
to rounding. |
For other inquiries about this publication, contact Paul Rochon at (613) 996-9447.
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