Ottawa raking in billions more than expected thanks to inflation and natural resource revenue - National Post

Prime Minister Mark Carney speaks to journalists outside his office in Ottawa on Sept. 1, 2026. Photo by Blair Gable /PostmediaArticle contentThe federal government may be on track to take in almost $20-billion more in taxes and other revenue this year than had been expected less than six months ago, National Post has learned, potentially handing Prime Minister Mark Carney much more room in his second budget to cut taxes, trim Canada’s massive deficit or spend.

In its Spring Economic Update in late April, the government said it expected to rake in $529.6-billion this fiscal year, which would have been an increase of 3.5 per cent over the previous year.

But instead, according to government figures up to the most recent month, Ottawa has so far this year taken in 7.4 per cent more than the previous year, more than double the pace of growth that had been expected. If the growth continues throughout the year, that translates to $549.4-billion, or $19.8-billion more than what had been expected in April.

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Economists say the federal government, like the provinces and territories, is sitting on extra cash this year due to higher-than expected income tax payments, a small jump in inflation, and strong markets for many natural resources, particularly oil. That means increases in both corporate income tax and sales tax.

Trevor Tombe, professor of economics at the University of Calgary and director of fiscal and economic policy at the School of Public Policy, said he’s surprised at the federal government’s revenue spike, although he emphasized that Ottawa shouldn’t assume that those increases will continue.

Canada’s trade relationship with the U.S. remains uncertain while growth has been sluggish and the government’s fiscal situation is dire, leading to questions about how long the revenue spike will continue, economists say.

“It’s hard to count on anything,” said Tombe.