Saturday, March 29, 2008

Tax cuts shrink government revenues; eat away at surplus

OTTAWA — The days of the federal government routinely recording surpluses in the tens of billions appear to be over, a new finance department report on its fiscal position suggests.

The department's fiscal monitor released Friday shows that revenue growth came to a sudden halt in January, shrinking the surplus for the month to a mere $600 million as the GST cut and personal income tax reductions announced last fall began eating away at Ottawa's tax haul.

The finance department said revenues dropped $900 million, or 3.9 per cent, in January. Last year during the month, the budgetary surplus was $2.4 billion.

For the first 10 months of the fiscal year that ends Monday, the accumulated surplus was $10 billion, down $600 million from the corresponding period last year.

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