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32 Tax Memo 1 (1963)

handle is hein.journals/taxmmo32 and id is 1 raw text is: TAX No.32 MEMO February, 1963 CANADA'S 1963 FEDERAL BUDGET PROSPECTS The Foundation's annual federal budget forecast was prepared before, but is published in the wake of, the dissolution of Parliament. This event dashed prospects for an early budget and postponed the day of a national accounting until late spring at the earliest. The following describes the bounds within which any Minister of Finance will operate in the coming fiscal year and may serve as an interim indication of the fiscal climate until a budget can be introduced. In estimating the fiscal outlook the Foun- dation does not try to predict the unpredictable. It simply looks at the revenue prospects when present tax rates are applied to the anticipated national product. On the expenditure side it tries to assess the trends of government spend- ing on current programs but makes no assump- tions regarding the possibility of new programs which may result from the current election campaign. Whatever government is elected, it will have to start from these realities. There were several additional complica- tions in the forecasting exercise this year. The fact that the Main Estimates for the coming year have not yet been tabled means that the official estimate of how much existing programs will grow or contract is not available. The new web of federal-provincial fiscal relationships adds to the difficulties of predicting the federal take from the personal and corporation income tax. A decision had to be made about how tem- porary the customs surcharges are. In view of the repeated statements that they would be lifted as soon as possible, and the uncertainty as to when this would occur, it was decided not to count them in the revenue potential for next year. For the current fiscal year it appears that the revenue expectations announced by the Minister on October 22, 1962 will be realized. His ex- penditure forecast may be a little low in the light of civil service pay increases, high interest rates and other developments. As a result the deficit may approach $600 million instead of the $570 million forecast by the Minister in October. For the 1963-64 fiscal year revenues are ex- pected to go up by more than $200 million in response to a moderate growth in the gross national product, but under our assumption about the surcharges, there will be an offsetting loss of at least $100 million if they are not continued. The range of expenditure estimates which appear reasonable indicates a deficit at least as large as this year's $600 million and perhaps as high as $800 million. Indications are that the government's non-budgetary cash needs will not greatly exceed this year's level. A more detailed analysis follows. Additional copies of this Memo may be obtained at a price of 15¢. CANADIAN TAX FOUNDATION

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