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29 Tax Memo 1 (1962)

handle is hein.journals/taxmmo29 and id is 1 raw text is: TAX No. 29 MEMO January, 1962 PROVINCIAL FINANCES 1961-62 Red ink continued to dominate provincial Estimates in the fiscal year 1961-62. On the basis of inter-provincially comparable figures, deficits totalling $348 million are due for nine out of ten provinces this year. Preliminary figures for the previous year indicate that the provinces outspent revenues by $314 million with only one, Prince Edward Island, ending up in the black. These facts emerge from a recent compilation by the Dominion Bureau of Statistics of provincial Estimates for 1961-62 and preliminary figures for 1960-61. Because the Bureau combines current and capital expen- ditures and re-arranges some of the figures given by the provincial treasurers in their budgets to obtain inter-provincial comparability, the DBS analysis does not always present the same pic- ture as the treasurers. Those in Prince Edward Island, Nova Scotia, New Brunswick and Man- itoba predicted surpluses and the Saskatchewan treasurer announced a deficit, but in the DBS analysis only for Saskatchewan is a surplus forecast for 1961-62 and it will be nominal. The DBS study shows that the provinces expect to take in nearly $2,749 million and to spend almost $3,097 million in 1961-62. Com- pared with the preliminary figures for the pre- vious year, revenues will be up by $195 million and expenditures by $229 million, about 8% in each case. The excess of expenditures over revenue will be $34 million greater than in the previous year and will represent close to 13% of revenue. Receipts from taxes are expected to provide more than 50% of total provincial revenues for the first time since the 1952 tax agreements became effective. Federal tax-shar- ing and subsidy payments to the provinces will provide about 20% of revenues as compared with 21% the previous year, and privileges, licences and permits will continue to produce about 20%. The total tax take is estimated at nearly $1,400 million, federal payments at $553 million, and privileges, licences and per- mits at $541 million. As in the previous year, three-quarters of provincial expenditures are budgeted for trans- portation, health, social welfare and education - a total of $2,360 million. With provincial hospital insurance plans in effect across the country, health and welfare expenditures are expected to take the lead with 28% of total expenditures, followed closely by transportation and education with 24% each. Over the past five years, revenues of pro- vincial governments have increased by about 54%, or by $959 million. Expenditures have climbed by 75%, or by $1,326 million. Among sources of revenue, taxes are now relatively more important and privileges, licences and permits and liquor profits relatively less import- ant than in 1956-57. On the expenditure side, outlays for health and education now bulk larger in the total than in 1956-57, while ex- penditures for transportation and natural re- sources have declined relatively. Payments to local authorities in 1961-62 will approximate $785 million, about 25% of all provincial outlays. Direct debt of the provinces at March 31, 1960 totalled $3,323 million, a 35% increase over March 31, 1955. Indirect debt rose by 104% in the same period to $3,081 million. Additional copies of this Memo may be obtained at a price of 154. CANADIAN TAX FOUNDATION TAX FOUNDATION CANADIAN

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