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Surplus to exceed $5 billion

Vote Quimby

TRIBE Member
Surplus expected to exceed $5-billion


By HEATHER SCOFFIELD
Globe and Mail Update


Ottawa — The federal government is to announce Wednesday that the surplus this fiscal year will top $5-billion — more than double the previous estimates — thanks in large part to a tax haul from Canadian banks.

The Department of Finance will explain that the unexpected windfall came from corporate taxes paid by financial institutions, which posted a whopping 62-per-cent rise in profits in 2003.

The last official estimate of the federal surplus was just $2.3-billion, announced in the government's economic update in November. Finance Minister Ralph Goodale stuck to that forecast until about two weeks ago, when he started hinting that corporate tax revenues would be higher and equalization payments to the poorer provinces lower than initially anticipated.

Finance officials will have new calculations for equalization later this month, but expect to save up to $2-billion this fiscal year because Ontario's economy did poorly. That means the discrepancy between the have and have-not provinces diminishes, letting Ottawa off the hook for some expected transfer payments.

Of the $5-billion or so in surplus that is now expected, already $2-billion of that is earmarked for the provinces to help pay for health care. But that leaves more than $3-billion available for the government to spend before the end of the fiscal year, on March 31.

More importantly from Prime Minister Paul Martin's perspective, it leaves more than $3-billion to spend before a spring election, if he can figure out ways to get the money out the door before the books close on March 31.

A formal notice of the new surplus forecast will be released Wednesday as part of the Department of Finance's monthly fiscal update, several Ottawa sources said.

An update on the surplus forecast is not normally included in the monthly reports. But Mr. Goodale has publicly recognized that there has been a loss of confidence in the federal numbers because Ottawa has consistently low-balled its surplus, booking billions in extra revenue at the end of the year that must automatically go toward paying down the debt since it was not budgeted for anything else.

The new minister has vowed to correct the lack of confidence by being more forthcoming about where the books stand.

An official, final figure for the 2003-04 fiscal year will not be ready until all taxes have been collected and calculated, and the year's spending has been sorted out. Usually, the number is published in September or October.

Still, Finance officials are renowned for their conservative estimates, and the government will likely feel comfortable enough with the estimate to start spending the money.

The challenge will be to find ways to spend $3-billion in just seven weeks.

At the top of the list, Ottawa is hoping to speed up deals with cities and provinces to rush out infrastructure funds before the end of March. But these arrangements are notoriously cumbersome to arrange.

Some of the details will no doubt come in the coming budget, expected probably on March 23, but could come earlier, on March 9.

Mr. Goodale will likely try to avoid booking any continuing programs that will ring up costs in coming years. That's because surpluses still look small in the next two years. However, a bigger surplus in 2003-04 means a better starting point for the 2004-05 fiscal year, and will mean more spending money than initially expected in that year too.

Rather, Mr. Goodale will be looking for ways to spend the money on one-time projects that can be cobbled together quickly enough to get the money allocated by March 31. When Mr. Martin was finance minister, he was a big proponent of year-end funds and foundations that would scoop up the extra billions left over at the end of the fiscal year and put them aside to be spent in later years. But Auditor-General Sheila Fraser dislikes such practices, and the government already has enough trouble with her office.

http://globeandmail.com/servlet/story/RTGAM.20040210.wbudg0210/BNStory/Business/
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Nice. Just before an election too. Now Martin can go make everyone forget about the Public Works boondoggle.

Wouldn't want to pay down the debt or give more money for health care. :rolleyes:
 
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AdRiaN

TRIBE Member
The Department of Finance will explain that the unexpected windfall came from corporate taxes paid by financial institutions, which posted a whopping 62-per-cent rise in profits in 2003.
I thought big corporations, especially banks, did not pay corporate taxes? :rolleyes:
 

KickIT

TRIBE Member
Originally posted by AdRiaN
I thought big corporations, especially banks, did not pay corporate taxes? :rolleyes:

I thought you said they shouldn't be taxed cuz their profits would trickle down to us lower class folk.

*c*
 

OTIS

TRIBE Member
Originally posted by AdRiaN
I thought big corporations, especially banks, did not pay corporate taxes? :rolleyes:

According to the department of finance:

The average Canadian corporate tax rate, including capital taxes, is now lower than that of the U.S. By 2008 it will be more than 6 percentage points below the average U.S. rate.

Thanks for the disingenuousness tho.
 
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oddmyth

TRIBE Member
Originally posted by KickIT
I thought you said they shouldn't be taxed cuz their profits would trickle down to us lower class folk.

*c*

Only if you believed a word of what Reagan said in the 80's

odbx
 

Boss Hog

TRIBE Member
Originally posted by Vote Quimby

The Department of Finance will explain that the unexpected windfall came from corporate taxes paid by financial institutions, which posted a whopping 62-per-cent rise in profits in 2003.


yes when they gouge people that much they make 62 percent rises in profits (I know it's not ALL from gouging but when was the last time you said "hey these bank fees I'm paying are actually pretty good!"?) - they should be paying more taxes.

How I fucking hate banks.
 

divell420

TRIBE Promoter
The challenge will be to find ways to spend $3-billion in just seven weeks.

Heh.

Wheee we're not adding to the debt this year! Quick, spend all the money! It might burn a hole in the treasury's pockets!
 
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docta seuss

TRIBE Member
i'm pleased with our current government, as i was with chretien's. it's easy to criticize, but i think they'll handle the juggling act quite well.
 

docta seuss

TRIBE Member
Re: Re: Surplus to exceed $5 billion

Originally posted by divell420

Wheee we're not adding to the debt this year! Quick, spend all the money!

this isn't the first year we've had a surplus. the deficit's been gone for a while.
 

Ditto Much

TRIBE Member
in grand total we owe somewhere around 550 billion actually.

Add to that another 100 billion in onatrio accumulated and I think that Quebec is about the same. In grand total including municiple and provinicial debts I believe we as a society owwe somewhere around 1 trillion...

However we have also been doing fairly good with debt forgiveness, as long as they match or third world debt relief to our budget surplus I'm happy.

5 billion isn't really that much. I think its best to hold on until we have a solid 30 billion. Then we have enough to start a major canada wide effort on a few projects.
 

Static EQ

TRIBE Member
Re: Re: Surplus to exceed $5 billion

Originally posted by Boss Hog
yes when they gouge people that much they make 62 percent rises in profits (I know it's not ALL from gouging but when was the last time you said "hey these bank fees I'm paying are actually pretty good!"?) - they should be paying more taxes.

How I fucking hate banks.

keep complaining... ive got a PC and an ING account.

have not paid a fee in ages
 
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