Budget Plan, Annex 1 (Budget 2000)

Budget Plan - Annexes
	Annex 1
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Annex 1
Spending, Tax Relief and Debt Reduction Since the 1997 Budget

The following tables present the fiscal impact of the spending and tax relief initiatives since 1997-98 – the first year a budgetary surplus was recorded since 1969-70. They show the various initiatives undertaken in the 1998, 1999 and 2000 budgets, as well as cumulative totals.

Table A1.1 summarizes the fiscal impact of the initiatives over the period 1997-98 to 2002-03. In addition, it shows the reduction in public debt realized to date.

Tax relief since 1997-98 has been of two forms – tax expenditures and general tax relief. Tax expenditure measures include the Canada Child Tax Benefit, the education credit, credit for interest on student loans, and caregivers’ credit, among others. While netted against revenues in the Government’s financial statements, the tax expenditure measures in many respects share features similar to spending initiatives. They provide benefits to targeted groups – benefits which could be delivered through spending programs. In contrast, general tax relief affects the basic parameters of the income tax system and provides benefits to a large number of taxpayers. This includes changes to tax rates, the amount of income that a taxpayer can earn tax free and the elimination of the surtax. As a result, the overall allocation of the initiatives between spending, tax relief and debt reduction is affected by whether the tax expenditure measures are included as tax reduction or spending. Table A 1.1 shows it both ways.

Table A.1.1
Cumulative Amount of Spending, Tax Relief and Debt Reduction From 1997-98 to 2002-03

	billions of dollars	per cent of total	billions of dollars	per cent of total

	Tax expenditures
	as tax relief		as spending


Spending initiatives
Improving the quality of life of Canadians	29.8	25.0	37.7	31.5
Making Canada’s economy more innovative	17.6	14.7	19.3	16.1
Providing essential public services	7.7	6.5	7.7	6.5
Total spending initiatives	55.2	46.3	64.7	54.2
Tax expenditures and general tax relief
Tax expenditures
Making Canada’s economy more innovative	1.5	1.2
Improving the quality of life of Canadians	7.8	6.6
Tax fairness measures	0.2	0.2
General tax relief	32.1	26.9	32.1	26.9
EI premium reductions¹	16.1	13.5	16.1	13.5
Total tax initiatives	57.6	48.3	48.1	40.4
Debt reduction	6.4	5.4	6.4	5.4
Total	119.2	100.0	119.2	100.0

¹ Assumes a 10-cent-per-year reduction in employee premium rates for 2001, 2002 and 2003. Actual rates are set each year by the Employment Insurance Commission. Note: Numbers may not add due to rounding.

The cumulative amount of spending, tax relief and debt reduction over the 1997-98 to 2002-03 period is $119.2 billion. Including the tax expenditure measures as part of overall tax relief, new spending initiatives amount to $55.2 billion – 46 per cent of the total – tax relief amounts to $57.6 billion and there was $6.4 billion of debt relief – 54 per cent of the total. The debt reduction total only includes the actual reduction in public debt to date. To the extent that the annual $3 billion Contingency Reserve, included in the fiscal projections over the 1999-2000 to 2002-03 period, is not needed, the amount of debt reduction would increase correspondingly.

The ratios are reversed if the tax expenditure measures are included in spending.

With tax expenditure measures included in spending, the cumulative amount of spending initiatives is $64.7 billion – 54 per cent of the total – compared to general tax relief and EI premium rate reductions of $48.1 billion and debt reduction of $6.4 billion – 46 per cent of the total.

Table A.1.2
Spending and Tax Initiatives: February 2000 Budget

	1999- 2000	2000- 2001	2001 2002	2002- 2003


(millions of dollars)
Spending initiatives
Improving the quality of life for Canadians and their children
Canada Health and Social Transfer¹	2,500
Support for families with children			607	965
Opportunities for Canadians with disabilities		33	37	32
Assisting the homeless	63	235	220	220
Total	2,563	268	863	1,217
Making the economy more competitive
Investing and research and innovation
Canada Foundation for Innovation	900
Genome Canada	160
Other	35	208	278	268
Total	1,095	208	278	268
Promoting environmental technologies and practices	235	148	143	159
Strengthening federal, provincial and municipal infrastructure		300	550	750
Total	1,330	656	971	1,177
Providing essential public services
Defence	634	546	550	600
Economic adjustment	661	511	500
Furthering international co-operation	175	110	155	200
Operating and capital	505	1,000	834	760
Total	1,974	2,167	2,039	1,560
Total spending initiatives	5,867	3,091	3,873	3,953
Tax expenditures and general tax actions
Improving the quality of life for Canadians and their children
Canada Child Tax Benefit		475	1,020	1,350
General tax relief and fairness measures
Personal income tax relief		2,835	4,600	5,830
Corporate income tax reductions		-65	320	475
Fairness measures	-25	-55	-30	-25
Reduction in EI premium rates²	345	1,392	2,174	2,980
Total	320	4,107	7,064	9,260
Total tax initiatives	320	4,582	8,084	10,610
Total spending and tax initiatives	6,186	7,672	11,957	14,563

¹ The 1999-2000 CHST cash supplement will be paid into a third-party trust in 2000-01, on passage of authorizing legislation. ² Assumes a 10-cent-per-year reduction in employee premium rates for 2001, 2002 and 2003. Actual rates are set each year by the Employment Insurance Commission. Note: Numbers may not add due to rounding.

Table A.1.3
Spending and Tax Initiatives: February 1999 Budget

	1998- 1999	1999- 2000	2000- 2001	2001- 2002	2002- 2003


(millions of dollars)
Building a secure society
Strengthening health care for Canadians
Canada Health and Social Transfer¹	3,500		1,000	2,000	2,500
Other health care initiatives
Improving health information systems	95	28	85	120	120
Promoting health-related research and innovation¹	160	50	115	225	225
First Nations health services		20	60	110	110
Preventive and other health initiatives		49	104	134	134
Total	255	147	364	589	589
New partnerships with Aboriginal peoples		49	144	159	159
Crime prevention	13	95	128	159	159
Furthering international co-operation	187	55	80	80	80
Addressing environmental challenges	12	18	17	17	17
Other
Equalization: technical improvements		48	97	145	194
Official languages in education		70	70	70	70
Parks Canada	35
Compensation and benefit issues in the military		175	175	175	175
Total	4,002	658	2,074	3,393	3,942
Building a strong economy
Building on the Canadian Opportunitie Strategy
Creating knowledge
Canada Foundation for Innovation²	100
Support for advanced research	16	50	55	55	55
Disseminating knowledge		27	42	27	27
Commercializing knowledge		121	232	317	317
Supporting employment		265	265	265	265
Total	116	463	594	664	664
Economic adjustment
Canadian Fisheries Adjustment and Restructuring Program600	355	116	48
Agriculture Income Disaster Assistance Program	600	285	15
DEVCO	41	5	21	21	21
Total	1,241	645	152	69	21
Total: Building a strong economy	1,357	1,108	746	733	685
Total spending initiatives	5,358	1,766	2,820	4,126	4,627
Tax expenditures and general tax actions
Building a secure society
Increase in Canada Child Tax Benefit			225	300	300
General tax relief and fairness measures
Extension of $500 supplement to all taxpayers		665	1,110	1,290	1,499
Increase in tax-free income by $175		270	450	525	613
Elimination of 3 per cent surtax		595	995	1,150	1,329
Tax fairness measures		15	25	100	100
Reduction in 1999 EI premiums³	300	1,250	1,250	1,250	1,250
Total	300	2,795	3,830	4,315	4,791
Total	300	2,795	4,055	4,615	5,091
Total spending and tax initiatives	5,658	4,561	6,875	8,741	9,717

¹ CHST supplement in 1998-99 was paid to a third party trust in 1999-2000. ² An additional $200 million is being allocated to the Canada Foundation for Innovation. It is expected that about half will be used to improve infrastructure for health research. ³ Change from 1999 budget. Note: Numbers may not add due to rounding.

Table A.1.4
Spending and Tax Initiatives: February 1998 Budget


	1997- 1998	1998- 1999	1999- 2000	2000- 2001	2001- 2002	2002- 2003

(millions of dollars)
The Canadian Opportunities Strategy
Millennium Scholarship Foundation	2,500
Canada study grants	100	100	100	100	100	100
Increased funding for granting councils	120	135	150	150	150	150
Student Loans Program	50	145	150	158	158	158
Canada Education Savings Grant¹		267	511	744	979	1,164
Connecting Canadians to information and skills	55	60	70	75	75	75
Supporting youth employment		50	75	100	100	100
Total	2,555	647	1,036	1,319	1,562	1,747
Building a secure society
Increase in CHST cash floor	200	900	1,500	1,500	1,400	1,200
Other health initiatives
National AIDS Strategy		41	41	41	41	41
Canadian Breast Cancer Initiative		7	7	7	7	7
Sustaining Canada’s blood system¹		55	55	25	25	25
Hepatitis C¹	800
Tobacco Demand Reduction Strategy		10	10	10	10	10
Total	800	113	113	83	83	83
Total	1,000	1,013	1,613	1,583	1,483	1,283
Support for families
Increased funding for employability
Assistance for persons with disabilities		15	20	20	20	20
New partnership with Aboriginal peoples	350	126	126	126	126	126
Promoting Canadian culture and sports	43	103	153	153	153	153
Strengthening communities		42	67	67	67	67
Environmental efficiency and innovation		94	94	94	94	94
Furthering international co-operation	90	70	20	20	20	20
Total	1,483	1,463	2,093	2,063	1,963	1,763
Total spending initiatives	4,038	2,110	3,129	3,382	3,525	3,510
Tax expenditures and general tax actions
The Canadian Opportunities Strategy
Credit for interest on student loans		80	130	145	155	165
Life-long learning (RRSPs)		15	40	45	50	55
Part-time education tax credit (includes part-time CCED)		25	90	90	90	90
EI premium holiday for youth			100	100
Total	120	360	380	295	310
Building a secure society
Deductibility of health/dental insurance premiums			90	110	125	125
Caregiver credit		30	120	125	130	130
Canada Child Tax Benefit			320	750	850	850
Child care expense deduction		20	45	45	45	45
Disability measures		5	5	5	5	5
Alternative minimum tax and RRSPs		70	20	20	20	20
Emergency services		5	10	10	10	10
Total	130	610	1,065	1,185	1,185
General tax relief and fairness measures
Eliminate surtax for taxpayers up to $50,000		710	1,175	1,365	1,430	1,498
Tax relief for low-income taxpayers		170	270	315	330	346
Reduction in EI premiums¹	235	725	725	725	725	725
Tax fairness measures		-5	-25	30	35	41
Total	235	1,600	2,145	2,435	2,520	2,610
Total targeted and general tax actions	235	1,850	3,115	3,880	4,000	4,105
Total spending and tax actions	4,273	3,960	6,244	7,262	7,525	7,615

¹ Revised from February 1998 budget. Note: Numbers may not add due to rounding.

Table A.1.5
Summary of Spending and Tax Actions in 1998, 1999 and 2000 budgets


	1997- 1998	1998- 1999	1999- 2000	2000- 2001	2001- 2002	2002- 2003	Cumulative total

(millions of dollars)
Spending initiatives
Building a secure society
Strengthening health care for Canadians
Canada Health and Social Transfer	200	4,400	4,000	2,500	3,400	3,700	18,200
Other health initiatives	800	368	260	447	672	672	3,218
Other	483	697	1,054	1,458	2,147	2,550	8,388
Total	1,483	5,465	5,313	4,405	6,219	6,921	29,806
Building a strong economy
Canadian Opportunities Strategy	2,555	763	2,829	2,569	3,197	3,588	15,501
Economic adjustment		1,241	645	152	69	21	2,128
Total	2,555	2,004	3,474	2,721	3,266	3,609	17,629
Providing essential public services		1,974	2,167	2,039	1,560	7,739
Total spending initiatives	4,038	7,469	10,761	9,292	11,523	12,089	55,173
Tax expenditures and general tax relief
Canadian Opportunities Strategy		120	360	380	295	310	1,465
Building a secure society
Canada Child Tax Benefit			320	1,450	2,170	2,500	6,440
Other		130	290	315	335	335	1405
General tax relief		880	2,975	7,005	9,645	11,590	32,095
Tax fairness measures		-5	-35	0	105	116	181
EI premium reductions	235	1,025	2,320	3,367	4,149	4,955	16,050
Total	235	2,150	6,230	12,517	16,699	19,805	57,636
Total spending and tax initiatives	4,273	9,619	16,991	21,809	28,213	31,895	112,809

Note: Numbers may not add due to rounding.

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Annex 1 Spending, Tax Relief and Debt Reduction Since the 1997 Budget

Annex 1
Spending, Tax Relief and Debt Reduction Since the 1997 Budget