Ottawa provides revenue and spending details

The federal government collected nearly $200 billion in taxes and other revenues in the fiscal year ending March 31, 2005, the department of finance said Monday in a detailed breakdown on how those funds were raised, and how they were spent. The $198.4 billion total represents about 15% of Canada’s $1.3 trillion economy.

Personal income tax is by far Ottawa’s largest revenue source, providing the government with $90 billion in the 2004-05 fiscal year — about 45% of all federal revenues. The GST and corporate income tax added about $30 billion each to Ottawa’s coffers. Other taxes, such as non-resident taxes, import taxes and taxes on alcohol and tobacco, contributed $16.7 billion to the federal war chest. Surplus funds from the employment insurance program amounted to $17.3 billion, while earnings from other sources, such as Crown corporations provided the remaining $15 billion.

On the spending side of the equation, $53 billion went to government operating costs, including defence ($13.9), public safety, which includes the RCMP and the federal prison system, ($9 billion) and the CRA ($3.7 billion).

Transfer costs to individuals amounted to $42.6 billion in 2004-05, including $27.9 billion to the OAS and GIS retirement programs, and $14.7 billion to employment insurance payments. The provinces received $42 billion in transfer payments to help pay for health care, education and other social services.

Ottawa also spent $34 billion on interest payments on the country’s public debt. Other major costs, such as federal grants, contributions and subsidies added up to $25 billion.

When it’s all tallied up, Ottawa was left with a $1.6 billion surplus, which went directly to the debt.

“Together with other surpluses recorded in recent years, this has helped cut the federal debt by $63 billion,” the department of finance said in its analysis entitled Where Your Tax Dollar Goes. “And lower debt means the government and taxpayers are saving $3 billion a year in interest costs.”

Details on Ottawa’s fiscal position for the latest fiscal year and the Conservative government’s spending priorities are expected next month, when Finance Minister Jim Flaherty tables his first budget.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com