About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

41 Tax Memo 1 (1966)

handle is hein.journals/taxmmo41 and id is 1 raw text is: TAX No.41 MEMO February, 1966 FEDERAL BUDGET OUTLOOK-1966 On the eve of our centenary it now appears that Canada will complete a decade of budgetary deficits in 1966-67. However it has been a decade in which the concern about budgetary deficits has waned as attention turned to the more comprehensive national accounts budget which economists regard as a better barometer of the impact of the government sector on the economy. During the same decade the national accounts budget registered a surplus on two occasions and a much smaller deficit in five other years. Indications are that it has good prospects of coming close to balance in the coming fiscal year. Since the Minister of Finance still presents his budget in the traditional form (and only adds the national accounts figures in an appendix), the Founda- tion is continuing its annual forecast on a budgetary accounts basis. However, where appropriate, the out- look for the principal non-budgetary items which go into the national accounts budget is indicated so that one can see what is mainly responsible for turning a budgetary deficit into a national accounts surplus. In presenting its forecast the Foundation does not attempt to predict tax changes. Its objective is simply to show what the output of the revenue machine would be, given stated assumptions about the growth of gross national product and the state of the economy. It also seeks to assess expenditure trends, looking beyond the Main Estimates which reveal only part of the iceberg. This exercise indicates how much room the Minister of Finance has for manoeuvre and gives a picture of the likely magnitude of the federal government sector in the coming year. The projections indicate that for the current year the government will end up with a budgetary deficit of not much over $50 million, well below the $300 million predicted by the former Minister of Finance in his 1965 budget speech. While expenditures are expected to exceed the Minister's target by about $100 million, the rapid rate of growth in the economy and price increases have produced more than $300 million additional reve- nue beyond the Minister's anticipations. Revenues in the coming year will continue to swell even without tax changes but it is not likely that the increase will match the half billion gain of the current year. The reasons are the expected slower rate of growth in the economy, last year's 10% tax cut and scheduled further vacating of the personal income tax field by the federal government in favour of the prov- inces. Expenditures, on the other hand, are expected to go up considerably more than the half billion rise of the current year because of new programs and higher prices and salaries. As a result it is anticipated that there will be a shortfall of budgetary revenue of some- thing between $400 million and $600 million in the coming year. On a national accounts basis the current year will definitely be in the surplus column because most of the extra-budgetary funds will take in more than they dis- burse and other major adjustments will contribute to improving the government's position this year. In the coming year the plus factors in the national accounts budget will have to overcome a budgetary deficit of from $400 to $600 million to achieve a surplus but this is not impossible, judging by the past year's experience. If the Canada Pension Plan surplus in the federal gov- ernment sector was included, there would be no doubt about a national accounts surplus but since the excess in the fund is earmarked for the provinces it probably should not be considered in the federal figures. The Old Age Security fund, which is outside the budgetary accounts, is expected to show a surplus of $244 million this year despite the extension of the pen- sion to 69 year-olds on January 1, 1966. In the coming fiscal year the 68 year-olds will be added for the last three months but the revenues from the three Old Age Security taxes will be sufficiently buoyant to prdduce another surplus of about the same amount. Indications are that the government's overall cash needs will be somewhat greater than in the current year. A more detailed analysis follows. Additional copies of the Memo may be obtained at a price of 250. © 1966 Canadian Tax Foundation CANADIAN TAX FOUNDATION

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most