POLITICS
09/30/2011 12:59 EDT | Updated 11/30/2011 05:12 EST

Federal deficit grows to $7.1 billion during first third of fiscal year

OTTAWA - Ottawa says it had a $1.6 billion budget shortfall in July as corporate revenues fell and government spending rose during the month.

That takes the government's deficit for the first four months of the current fiscal year to $7.1 billion.

That's slightly better than the $7.7 billion hole it was in last year for the same period.

The July numbers showed revenues decreased by $218 million, mostly as a result of a 12.8 per cent dropoff in corporate taxes.

As well, non-resident income taxes and excise and duties were down, offsetting a $650 million gain in tax receipts from individual Canadians.

For the first four months, however, revenues are 3.2 per cent higher overall than last year.

The government says it spent about $800 million more than in July 2010 on transfer payments and other expenses.

For the first four months of the year, Ottawa says it is slightly closer to balance than last year with revenue gains running ahead of increases in expenses.

In the March budget, the government said it would run a $29.6 billion deficit during this fiscal year, compared to $40.5 billion last year.