There were a couple of puzzling things in my recent post on the sources of the federal defict, and I think I've solved the puzzle. I made a mistake.
This explains both the rise in PIT revenues and in transfers to persons I found in that previous post. When you use the numbers in Cansim's Table 380-0007, the surge in PIT revenues in 2005-06 disappears:
As does the increase in transfers to persons:
(That spike in 2005 was the one-time payment I removed from the graphs in the earlier post.)
So the conclusion to that last post should have pointed to
- Transfer payments to provinces that increased by about 0.5% of GDP
- Lost GST revenues of about 0.75% of GDP
I think I have it right this time. The sum of these two effects is approximately the size of the swing in the government balance between 2004 and 2008.