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.
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.
