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36 Tax Memo 1 (1964)

handle is hein.journals/taxmmo36 and id is 1 raw text is: TAX MEMO No.36 March, 1964 PROVINCIAL FINANCES 1963-64 This interim report is intended to fill the gap between the biennial issues of Provincial Finances- the first edition of which appeared in May 1963- and will present only a broad summary of the finan- cial position of the provinces in the intervening year. Estimates for the 1963-64 fiscal year indicate that for the eighth successive year total expenditures of the ten provinces will outpace revenues. The combined deficit for all provinces will amount to $350 million, compared with the 1963 deficit of $216 million (pre- liminary). Only two provinces are expected to end the 1964 fiscal year in the black, each with a surplus of just over $1 million. The above data have been derived from the Dominion Bureau of Statistics recent compilation of provincial Estimates for 1963-64. The report com- bines current and capital expenditures of the provin- cial governments and makes certain adjustments to provincial figures to put them on a uniform basis for interprovincial comparability. Because this work can- not be completed until all provincial figures are in, the Bureau's report necessarily appears some months after most provincial budget statements are issued. This analysis, being based on the D.B.S. most recent com- pilation, therefore covers fiscal year 1963-64 even though at the time of going to press the provinces had already issued their Estimates for the 1964-65 fiscal year. The D.B.S. report frequently differs from the figures presented by the provincial treasurers because of the adjustments made by the Bureau to achieve comparability. Under the D.B.S. method of reporting it is anticipated that only two provinces-British Col- umbia and Saskatchewan-will show surpluses for the 1963-64 fiscal year, whereas in their 1963 budget speeches, four provincial treasurers-of British Col- umbia, Alberta, Manitoba and Prince Edward Island -predicted that their governments would have small surpluses for this period-with one province-Nova Scotia-expecting to break even. The deficits for the eight provinces whose revenues are expected to fall short of expenditures range from $2 million for Prince Edward Island to $149 million for Ontario. About two-thirds of the provinces' revenue in the current year will come from taxes. They are expected to produce an extra $143 million over the 1963 esti- mated receipts of $2 billion, mainly due to increases in gasoline and income taxes. Privileges, licences and permits will bring in $609 million-over 18% of total revenue. Federal payments to the provinces and profits from the sale of liquor are both expected to amount to between 6% and 7% of total receipts, with the balance coming from other sources. Education will continue to take the largest bite of provincial expenditure. With an estimated price tag of over $1 billion, education is expected to con- stitute 28% of provincial spending. Hospital care and other health functions will assume almost 20% of total expenditure, with social welfare costs adding another 8%, for a total of $1 billion. Transportation and communications expenditure of approximately $743 million will probably claim another 20% of total expense. Total direct debt for all provinces amounted to $4.1 billion at March 31, 1962 (an increase of $1.8 billion over the figure for 1953) and indirect debt, to $4.3 billion (an increase of more than $3 billion). Interim figures for March 31, 1963 indicate that direct funded debt had increased by $200 million and guaranteed bonds and debentures by $400 million, over 1962. During the past ten years current and capital expenditure (exclusive of debt retirement) of all pro- vincial governments has risen by 195%-from almost $1.3 billion in fiscal 1954 to an anticipated $3.7 bil- lion in fiscal 1964. Total net general revenue during the same period has increased by only 152%-from $1.3 billion in 1954 to an estimated $3.4 billion in 1964. From a surplus position of almost $78 million in fiscal 1954, provincial finances have suffered reverses, to the point where a combined deficit of $350 million is foreseen for 1963-64. Additional copies of the Memo may be obtained at a price of 25¢. © 1964, Canadian Tax Foundation TAX FOUNDATION CANADIAN

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