The federal budget watchdog said Monday in a new report that Canada over the next five years would generate about $70 million less in revenue from cannabis taxation than Ottawa is expecting.
The Parliamentary Budget Officer (PBO), which provides independent analysis to Canadian Parliament on the state of the nation’s finances, said the Trudeau government is on track to run deficits nearly $8 billion deeper than expected over the next two years.
It estimated the Liberals will post a $22.1-billion shortfall this fiscal year, which would be $4 billion more than the projection of $18.1 billion in the federal government’s February budget.
For 2019-20, Jean-Denis Frechette’s team predicted a $21.4-billion deficit, $3.9 billion higher than the government’s forecast of $17.5 billion.
“We believe that the deficit is going to rise somewhat above what the government was assuming in the budget,” Mostafa Askari, the deputy parliamentary budget officer, told the Canadian Press in an interview.
The report’s release comes two months after the Liberal government introduced a budget that predicted deficits across the planning horizon, until 2022-23, with no timetable to return to balance. During the 2015 campaign, the Liberals had vowed to keep annual deficits at no more than $10 billion and to balance the books by 2019.
Finance Minister Bill Morneau has argued the shortfalls will help Canada make investments to raise long-term economic growth.
Any hope of returning to the black any time soon is remote, the budget office said Monday. It predicted there’s approximately a five percent chance the federal budget will be balanced or will show a surplus in 2020-21.
The blows to the federal bottom line will come from several sources, the independent budget office said.
“Our higher deficit forecast largely reflects our higher projections for public debt charges, direct program expenses, and children’s benefits,” the PBO wrote in its report.
(With Canadian Press)