Canada’s federal budget might seem
complicated at first. But it is
actually pretty easy to understand once you get to know the key concepts and
terms. Let’s go over the details. In Canada, there are three levels of
government. Each level has its own
group of elected officials who make decisions about specific issues and
handle certain responsibilities. The federal government is responsible
for all national matters, like defence and security, international trade,
citizenship and immigration, and the environment. Provincial or territorial governments
look after regional issues like healthcare delivery, agriculture,
transportation and education. And local concerns, such as garbage and
recycling, water and playgrounds, are all taken
care of by your municipal or local government. To ensure that all of these
responsibilities are looked after, governments must spend money. Same as
when your family buys groceries. We
call these expenses or expenditures. Where does this money come from? In
order to pay for Canada’s expenditures, the federal government collects money
from individuals and businesses, through taxes and other forms of income
and profits. The money they receive is
called revenue. Similarly, in your own life, you may
earn revenue through a job. Although you may plan to have an equal
amount of revenue or expenses, that is not always the case. A surplus occurs
when you have more revenue than expenditures. This is when
you earn more than you spend. On the other hand, a deficit happens
when there are more expenditures than revenue. This is when you spend
more than you earn. Although no one likes to have a
deficit, it can sometimes be necessary to ensure that government services are
maintained, or it can be used as a method to help boost the economy during
a challenging time, such as the recent global recession. When there’s a deficit, a government
needs to borrow money to cover the gap or shortfall. Years of deficit
accumulate to become that government’s debt. Now that we’ve gone over the main
concepts, it’s time to dive deeper into Canada’s revenues and expenditures.