Trudeau’s Deficit Balloons With Income Support Smashing Records
(Bloomberg) -- Canada’s budget deficit hit C$120.4 billion ($92 billion) in the three months through June, already more than double the largest yearly shortfall the country has ever run.
Program expenses surged to C$167.9 billion, up 117% over the same time last year, as the government rolled out massive support for individuals and companies to mitigate the economic damage of the pandemic.
On the other side of the ledger, revenues have fallen sharply, down 38% compared with last year, according to data released Friday by the nation’s finance department.
The numbers show Prime Minister Justin Trudeau’s government has already burned through one-third of his projected deficit for the full year. In a separate release Friday, Statistics Canada’s quarterly economic accounts data showed households have never been so reliant on income support programs. Almost one third of household income came from government transfers in the second quarter, an unprecedented share.
The decline in revenues has been driven primarily by falling tax receipts from corporations and sales taxes, the data show.
The federal government projected last month that its deficit for the fiscal year that began April 1 will reach C$343 billion, or 16% of the economy. The previous record deficit over a 12-month period was C$56 billion, run by former Prime Minister Stephen Harper in 2009.
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