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Ottawa posts 32 billion deficit for October as new tax credits weigh

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OTTAWA — The federal government said Monday it posted a deficit of $3.2 billion in October due in large part to its new income-splitting plan for families and the doubling of the children’s fitness tax credit.The result for the month compared with a deficit of $2.5 billion in October 2013.The tax changes resulted in a $1.6-billion adjustment to revenue and, without that, Ottawa would have posted a deficit of $1.6 billion for October.The Harper government announced in October it would go ahead with income-splitting plan for couples with children as well as higher child-care benefits.The income splitting plan has been sharply criticized by the opposition who say the $2-billion-a-year program would only benefit about 15 per cent of Canadian households.For October, the Finance Department said revenue was down by $200 million or 0.9 per cent compared with a year ago due to the tax changes, partially offset by increased corporate income tax revenue.Income splitting not the only good tax news for Canadians this weekCanada’s current account deficit shrinks to six-year low in latest sign economy is picking up speedProgram spending for the month was up by $600 million or 3.1%, while public debt charges decreased by $100 million or 3.4%.In its fall economic update, the federal government said last month it expected to post a deficit of $2.9 billion for 2014-15 and a $1.6-billion surplus in the 2015-16 fiscal year.Prime Minister Stephen Harper has said the falling price of oil will reduce some federal fiscal flexibility, but that it will balance the budget next year.For the current fiscal year to date, the government posted a deficit of $4 billion, compared with  a deficit of $12.8 billion in the same period a year ago.Revenue for the period from April to October increased $5.3 billion, or 3.7%, to $150.3 billion while program spending fell $3.2 billion, or 2.3%, to $137.7 billion. Public debt charges dropped to $16.5 billion from $16.9 billion for the comparable seven-month periods. read more