St. Andrews by-the-Sea (New Brunswick): The Canadian Taxpayers Federation (CTF) reacted today to the announcement that the federal government's surplus for the last fiscal year (2003-04) will be $9.1-billion, up significantly from the $1.9-billion forecast by Finance Minister Ralph Goodale in the March budget. The surplus money will be used to reduce Canada's debt, bringing it down to $501.5-billion.

"Government spending restraint is not the cause of today's big announcement, rather it is structural over-taxation by Ottawa that has created massive surpluses," said CTF federal director John Williamson. "The federal government should collect in taxes only what is needed to fund spending priorities. Annual surpluses represent over-taxation by government and the money should go back to taxpayers in the form of broadly based income tax cuts."

Finance Minister Goodale said last month Ottawa's revenue growth is "permanent" and there will be a "significant increase" in revenues in the coming years. Moreover, the results from cutting taxes on the federal treasury have been positive. "The most recent data would tend to indicate tax revenue is up, in fact, not down, even though the [tax] rates are down," he said. Similarly, today's news release from the Department of Finance says higher than forecast revenues should carry forward in future years.

"What the Finance Minister has said is that lower income taxes have had a positive impact on federal revenues," said Williamson. "A stronger economy and high tax levels have produced more tax revenues than Ottawa requires and this will continue in the coming years. The CTF anticipates the surplus this fiscal year (2004/05) will be in excess of $8-billion even after the Liberal government's spending program is implemented. Clearly, Ottawa has the fiscal capacity to offer Canadians broad based tax relief."

Today's announcement marks Ottawa's seventh consecutive surplus year. "It is a positive development that the federal government has reduced its debt by $61-billion over the past seven years," said Williamson. "But let's not pretend Ottawa has shortchanged itself to do this. Program spending is up more than $22-billion, or 19 per cent, since 2000, and this year spending will rise by another 5 per cent. Plus, the recent Throne Speech outlined new spending promises, but failed to address the need for Ottawa to reduce the tax burden paid by Canadian families. With tax receipts fast rising there is no excuse for Ottawa not to cut taxes," concluded Williamson.