Where Federal Revenue Comes From—and Where It Goes

Main revenue groups

Federal revenue is dominated by personal income tax, with corporate income tax, non-resident income tax, GST, customs and excise duties, Employment Insurance premiums and other revenues also contributing.

Revenue changes with employment, wages, profits, consumption, asset prices, policy and tax administration.

Main expense groups

Federal expenses include transfers to individuals, transfers to provinces and territories, direct program expenses, Crown-corporation results and public debt charges. Consolidated reporting also includes actuarial and other accounting items.

A program can be large in dollars but stable as a share of GDP, or small nationally but important to a specific group. Both scale and purpose matter.

The arithmetic of a fiscal change

A $5-billion tax reduction and a $5-billion spending increase have the same first-order effect on the annual balance, all else equal. Their economic and distributional effects can be very different.

Second-order effects—such as growth, behaviour and program interaction—require evidence and should not be assumed automatically.