Canadian Chamber of Commerce Federal Budget Analysis

The Canadian Chamber’s budget analysis prepared by their Chief Economist Tina Kremmidas.

With the recovery well entrenched, the federal government is enjoying a brighter fiscal outlook. The government is reporting a $40.5 billion deficit in fiscal 2010-11, almost a $5 billion improvement relative to what it had predicted in the October 2010 fiscal update. There are also small improvements in the size of the deficits going forward. While the government anticipates economic momentum will wane in the medium term, it is still planning to return to surplus in fiscal 2015-16.

The medium-term fiscal plan hinges on the government’s ability to wrestle annual program spending growth down to an average of about 1.6% per year through fiscal 2015-16—certainly a challenging goal, particularly when about half of the overall spending mix is dedicated to transfer payments which the government has indicated are off bounds. The government continues to rule out tax increases—including increases to business taxes—to balance its books. This is a victory for the Canadian Chamber and the network which launched a national campaign calling on all federal parliamentarians to keep their promise and proceed with the legislated cuts in the general corporate income tax rate. (more)