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20 Tax Memo 1 (1959)

handle is hein.journals/taxmmo20 and id is 1 raw text is: TAX MEMO No.20 February, 1959 FEDERAL BUDGET OUTLOOK - 1959 At this time of year the Foundation customarily presents its own forecast of the federal budgetary outlook. The purpose is to outline the basic problems in order to facilitate an understanding of the forthcom- ing national budget. For the year ending March 31, 1959, our- estimate of budgetary revenues at $4.7 billion and budgetary expenditures at $5.4 billion will result in a deficit of about $.7 billion. Although both revenues and expenditures have altered from the original estimates this short-fall is the same as that forecast by the Minister of Finance, the Hon. Donald M. Fleming. For the new year beginning on April 1, 1959, revenues will advance by some $300 million and expenditures by about $400 million. The projected deficit, after allowing for a reasonable margin of error in estima- tion, will therefore range from a low of $.7 billion to a high of $.9 billion. These projections are based on a modest growth in the economy of 4 to 5 per cent, no changes in the existing tax levels and the usual year-end expenditure adjustments, and are qualified accordingly. Personal income tax collections and taxes on spending will together increase by about $300 million while other sources of revenue will remain unchanged. Corporation profits are increasing but higher revenues there- from will not be received until the next %umeeding year (fiscal 1960-61). Expendi- ture increases include an estimated $160 to $170 million for defence (accounted for by reduced budgetary outlays in 1958-59 resulting from the elimination of the defence equipment replacement account), $100 million for hospital insurance and more than $50 million for interest charges. Notwithstanding the projected increase in the budgetary deficit the cash requirement for budgetary and non-budgetary purposes will decline in the new year and in addition refunding operations will be smaller. In view of the still large cash requirements the Minister must formulate policies to find the necessary funds without inappropriate expansion of the money supply, and, at the same time, must continue to encourage economic growth and employment. This is the dilemma faced by the Minister of Finance in the spring of 1959. In the following pages- a more detailed analysis is presented. Additional copies of this Memo may be obtained on request. CANADIAN TAX FOUNDATION

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