Budget Plan, Annex 1 (Budget 2003)

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Annex 1
Spending and Tax Relief 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. They show the various initiatives undertaken in the 1998, 1999, 2000, 2001 and 2003 budgets, as well as the October 2000 Economic Statement and Budget Update.

The Table A1.1 summarizes the fiscal impact of the initiatives over the period 1997–98 to 2004–05, as well as the reduction in federal debt realized to date.

Tax relief since 1997–98 has been of two forms — increases in tax expenditures and general tax cuts. Tax expenditure measures include the Canada Child Tax Benefit, the education credit, disability tax credit and the credit for interest on student loans, among others. While netted against revenues in the Government’s financial statements, the tax expenditure measures share features with spending initiatives. They provide benefits to targeted groups—benefits which could be delivered through spending programs.

In contrast, general tax cuts affect the basic parameters of the tax system and provide benefits to a large number of taxpayers. These include changes to tax rates, the amount of income that a taxpayer can earn tax-free and the elimination of surtaxes. As a result, the overall allocation of the initiatives between spending, tax relief and debt reduction is affected by whether the tax expenditures are included as tax reduction or spending. Table A1.1 shows it both ways.

The cumulative amount of spending, tax relief and debt reduction over the 1997–98 to 2004–05 period is $331.1 billion. With targeted tax expenditures included in spending, the cumulative amount of spending initiatives is $153.5 billion (46.4 per cent of the total) compared to general tax relief, employment insurance premium reductions and debt reduction totalling $177.6 billion (53.6 per cent of the total).

Including tax expenditures in overall tax relief, new spending initiatives amount to $131.6 billion (39.7 per cent of the total) while tax relief amounts to $151.9 billion and debt reduction amounts to $47.6 billion (60.3 per cent of the total). The debt reduction total includes the actual reduction in federal debt to date.

Table A1.1
Cumulative Amount of Spending, Tax Relief and Debt Reduction from 1997–98 to 2004–05

	Tax Expenditures

	As tax reduction		As spending

	(billions of dollars)	(per cent of total)	(billions of dollars)	(per cent of total)
Spending initiatives
Improving the quality of life of Canadians	76.2	23.0	91.9	27.7
Making Canada’s economy more innovative	34.0	10.3	40.3	12.2
Providing essential public services	23.4	7.1	23.4	7.1
Expenditure reallocation	-2.0	-0.6	-2.0	-0.6
Total spending initiatives	131.6	39.7	153.5	46.4
Tax expenditures and general tax relief
Tax expenditures
Making Canada’s economy more innovative	7.3	2.2
Improving the quality of life of Canadians	15.7	4.7
Tax fairness measures	-1.1	-0.3
General tax relief	101.2	30.6	101.2	30.6
EI premium reductions	28.8	8.7	28.8	8.7
Total tax initiatives	151.9	45.9	130.0	39.3
Debt reduction	47.6	14.4	47.6	14.4
Tax plus debt reduction	199.5	60.3	177.6	53.6
Total	331.1	100.0	331.1	100.0

Table A1.2
Spending and Revenue Initiatives Proposed in the 2003 Budget

	2002-2003	2003-2004	2004-2005


	(millions of dollars)
Spending initiatives proposed in this budget
Investing in Canada’s health care system
CHST supplement¹	2,500
Health reform
Health Reform Fund		1,000	1,500
Diagnostic/Medical Equipment Fund¹	1,500
Health information technology¹	600
Total	2,100	1,000	1,500
Direct Health Accord initiatives
Employment insurance compassionate family care leave benefit		86	221
Canadian Coordinating Office for Health Technology Assessment		5	10
Patient safety		10	10
Governance and accountability	70	15	30
National immunization strategy		5	10
Total	70	121	281
Other health initiatives
Canadian Health Services Research Foundation	25
Pharmaceuticals management		40	40
Planning, coordination and partnerships		10	20
Health services in official language minority communities		12	13
Sport participation		5	10
Total	25	67	83
First Nations and Inuit health	25	181	231
Total	4,720	1,369	2,095
Investing in Canadian families and their communities
Supporting Canadian families
Families with children
Early learning and child care services		25	81
Canadians with disabilities
Employability Assistance for Persons with Disabilities		193	193
Child and family law strategy		27	26
Total		245	300

¹ These transfers will be paid to a third-party trust and accounted for by the federal government in 2002-03, pending passage of legislation.

Table A1.2
Spending and Revenue Initiatives Proposed in the 2003 Budget (cont’d)

	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Supporting communities
Affordable housing and support for homeless
Affordable Housing Initiative		30	50
Residential Rehabilitation Assistance Program		128	128
Supporting Communities Partnership Initiative		135	135
Infrastructure
Strategic infrastructure ($2 billion over 10 years)			50
Municipal infrastructure ($1 billion over 10 years)		100	100
Proceeds of crime		23	23
Total		416	486
Strengthening Aboriginal communities
First Nations policing		18	24
Aboriginal language and culture		8	10
Federal Interlocutor for Métis and Non-Status Indians		3	3
Urban Aboriginal strategy		9	8
Total		38	45
Promoting Canadian culture and values
Historic places		10	10
Canadian Television Fund		75	75
Katimavik		5	12
Official languages		38	77
Legal aid		45	45
New Citizenship Act		11	10
Amateur sport		5	5
Total		188	233
Total		886	1,065

Table A1.2
Spending and Revenue Initiatives Proposed in the 2003 Budget (cont’d)

	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Investing in a more productive, sustainable economy
Strengthening research and innovation
Federal granting councils		125	125
Canada Graduate Scholarships		25	55
Indirect costs of research		225	225
Northern science		8	8
Canada Foundation for Innovation	500
Genome Canada	75
Rick Hansen Leadership Fund		2	2
The Medical and Related Sciences Project		10	10
SchoolNet and Community Access Program		30
National Research Council of Canada		35	35
Business Development Bank of Canada²	(102)	(88)
Aboriginal Business Canada		10	10
Total	575	470	470
Skills and learning
Skilled immigrants		20	22
Canada Student Loans Program		27	32
Canadian Learning Institute		100
First Nations’ education		10	25
Post-secondary scholarship for Aboriginal Canadians	12
Aboriginal skills and employment partnerships		10	15
Aquatic resources management		4	8
Total	12	171	102
Total	587	641	572
Advancing sustainable development
Climate change
Sustainable Development Technology Canada		250
Canadian Foundation for Climate and Atmospheric Sciences		50
Other climate change measures		200	200
Total		500	200

Table A1.2
Spending and Revenue Initiatives Proposed in the 2003 Budget (cont’d)

	2002–2003	2003–2004	2004–2005


	(millions of dollars)
The environment
Federal contaminated sites²		(75)	(100)
Air quality		15	25
Safe water systems		100	100
Canadian Environmental Protection Act		32	43
Species at risk		13	20
World Summit on Sustainable Development	4	7	6
Investing in national parks		32	42
Total	4	199	237
Total	4	699	437
Agriculture
Crop Reinsurance Fund	220
Enhancing food safety		50	50
Canadian Grain Commission		15	15
Farm Credit Canada²		(10)	(10)
Veterinary colleges	113
Total	333	65	65
Total	924	1,405	1,074
Canada in the world
Defence
New defence funding	270	800	800
Contingency	125	200
International assistance	353	202	820
Other
Enhanced presence in the U.S.		2	9
Security Contingency Reserve		50	25
Canadian Coast Guard		47	47
Total	748	1301	1701
Expenditure management and accountability
Streamlining for a potential natural gas pipeline	7	13	12
Strenthening enforcement		10	20
Smart regulation strategy		2	2
Total	7	25	34
Expenditure reallocations		-1,000	-1,000
Total spending initiatives	6,398	3,986	4,969

²These are non-budgetary expenditures. Although they do not affect the budgetary balance, they do result in a cash requirement.

Table A1.2
Spending and Revenue Initiatives Proposed in the 2003 Budget (cont’d)

	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Revenue initiatives proposed in this budget
Investing in Canada’s health care system
GST rebate for health care institutions		30	55
Investing in Canadian families and their communities
Supporting Canadian families
Families with children
Increasing the National Child Benefit supplement		200	300
Canadians with disabilities
Child Disability Benefit		40	50
Enhanced tax assistance for persons with disabilities
RRSP/RRIF rollovers to an infirm child		10	10
Expanding list of eligible expenses for the medical expense tax credit		20	20
Ensuring the effectiveness of the disability tax credit		25	80
Total		95	160
Investing in a more productive, sustainable Canadian economy
Advancing sustainable development
Climate change
Excise tax exemption for bio-diesel fuels		s	s
Improving tax incentives for renewable and alternative energy		5	5
Total		5	5

Table A1.2
Spending and Revenue Initiatives Proposed in the 2003 Budget (cont’d)

	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Improving the tax system
Supporting savings by Canadians
Increase RPP/RRSP limits	25	105	165
Supporting entrepreneurship and small business
Small business deduction increase to $300,000		60	110
Capital gains rollover for small business investors		10	10
Venture capital and qualified limited partnerships		–	–
Automobile benefit and expense provisions		20	20
Strengthening the Canadian tax advantage
Federal capital tax		60	395
Extension of mineral exploration tax credit			25
Improving the income taxation of the resource sector	10	55	100
Film or Video Production Services
Tax Credit		25	25
Total	35	335	850
Employment insurance premium rate reduction		53	178
Total revenue initiatives proposed in this budget	35	718	1,548
Total spending and revenue initiatives	6,433	4,704	6,517

Table A1.3
Spending Initiatives: October 2002 Economic and Fiscal Update

	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Spending initiatives
International assistance	70.4	202.6	116.7
Canada Strategic Infrastructure Fund		100	300
Support for agriculture	680	1,304	813
Softwood lumber assistance	149	156
Total	899.4	1,762.6	1,229.7

Table A1.4
Spending and Tax Initiatives: 2001 Budget

	2001–2002	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Spending initiatives
Improving the quality of life for Canadians and their children
Health initiatives	182	181	173	185
Employment insurance benefits	35	89	89	89
New partnerships with Aboriginal peoples	19	123	125	100
Crime prevention	53	62	75	75
Cultural initiatives	305	395	196	146
International assistance	240	37	311
Total	834	887	969	595
Making Canada’s economy more competitive
Investing in skills, learning and research	549	318	318	318
Strategic infrastructure and the environment	284	225	278	241
Total	833	543	596	559
Providing essential public services
Security	1,067	1,217	1,236	1,003
Maintaining a secure, open and efficient border	72	316	260	257
Departmental operations	752	464	318	258
Total	1,891	1,997	1,814	1,518
Total spending initiatives	3,558	3,427	3,377	2,670
Tax expenditures and general tax actions
Improving the quality of life for Canadians and their children
Donations of certain publicly traded securities to charities		70	70	75
Tobacco tax increases	-275	-440	-440	-440
Total	-275	-370	-370	-365
Making Canada’s economy more innovative	10	40	60	60
General tax and cost recovery measures
Delay in monthly remittances for small businesses	300	-300
Air Travellers Security Charge		-430	-445	-445
Other cost recovery		-50	-50	-50
Total	300	-780	-495	-495
Tax expenditures and general tax actions	35	-1,110	-805	-800
Total spending and tax initiatives	3,593	2,317	2,573	1,871

Table A1.5
Spending and Tax Initiatives: 2000 Economic Statement

	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005


	(millions of dollars)
Spending initiatives
Improving the quality of life for Canadians and their children
Canada Health and Social Transfer		2,800	3,600	4,300	4,900
Other health initiatives	1,500	200	200	200	200
Employment insurance benefits	200	430	490	530	530
Relief for Heating Expenses	1,459
Total	3,159	3,430	4,290	5,030	5,630
Making Canada’s economy more competitive
Canada Foundation for Innovation	500
Social Sciences and Humanities Research Council of Canada		20	20	20	20
Clean environment			100	100	100
Total	500	120	120	120	20
Total spending initiatives	3,659	3,550	4,410	5,150	5,650
Tax expenditures and general tax actions
Improving the quality of life for Canadians and their children
Canada Child Tax Benefit		260	355	355	595
Caregiver credit/disabilities	25	100	110	110	115
Total	25	360	465	465	710
Making Canada’s economy more competitive
Education credit	10	225	230	240	240
Capital gains inclusion rate	20	175	485	715	985
Flow-through shares	5	35	40	50	20
Total	35	435	755	1,005	1,245
General tax relief and fairness measures
Personal income tax relief	1,518	6,270	7,193	8,282	10,269
Corporate income tax reductions		268	1,300	2,450	3,530
Reduction in EI premium rates¹		100	300
Total	1,618	6,838	8,493	10,732	13,799
Tax expenditures and general tax actions	1,678	7,633	9,713	12,202	15,754
Total	5,337	11,183	14,123	17,352	21,404

¹ Assumes employee premium rate of $2.25 for 2001, $2.20 for 2002 and $2.10 for 2003.

Table A1.6
Spending and Tax Initiatives: February 2000 Budget

	1999–2000	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005


	(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		800	1,300	1,375	1,455
Opportunities for Canadians with disabilities		33	37	32	30	30
Assisting the homeless	63	235	220	220	16
Total	2,563	268	1,057	1,552	1,421	1,485
Making the economy more competitive
Investing and research and innovation
Canada Foundation for Innovation	900
Genome Canada	160
Other	35	208	278	268	328	388
Total	1,095	208	278	268	328	388
Promoting environmental technologies and practices	235	148	143	159	170	135
Strengthening federal provincial and municipal infrastructure		300	550	750	750	750
Total	1,330	656	971	1,177	1,248	1,273
Providing essential public services
Defence	634	546	550	600	650	700
Economic adjustment	661	511	500
Furthering international cooperation	175	110	155	200	155	155
Operating and capital	505	1,000	834	760	752	757
Total	1,974	2,167	2,039	1,560	1,557	1,612
Total spending initiatives	5,867	3,091	4,066	4,288	4,226	4,370
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	1,665	1,965
Making the economy more competitive
Capital gains inclusion rate		15	135	230	265	295
Rollover of capital gains		20	75	75	75	75
Taxation of gains on qualifying stock options		10	75	75	75	75
Total		45	285	380	415	445

Table A1.6
Spending and Tax Initiatives: February 2000 Budget (cont’d)

	1999–2000	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005


	(millions of dollars)
General tax relief and fairness measures
Personal income tax relief		2,758	4,255	5,435	6,583	7,816
Corporate income tax reductions		-65	250	310	325	350
Fairness measures	-25	-55	-30	-25	-25	-25
Reduction in EI premium rates²	345	1,392	2,174	2,980	3,780	4,380
Total	320	4,030	6,649	8,700	10,663	12,521
Tax expenditures and general tax actions	320	4,550	7,954	10,430	12,743	14,931
Total spending and tax initiatives	6,186	7,640	12,020	14,718	16,968	19,301

¹ The 1999–2000 CHST cash supplement was 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.

Table A1.7
Spending and Tax Initiatives: February 1999 Budget

	1998–1999	1999–2000	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005


	(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	2,500	2,500
Other health care initiatives
Improving health information systems	95	28	85	120	120	120	120
Promoting health-related research and innovation²	160	50	115	225	225	225	225
First Nations health services		20	60	110	110	110	110
Preventive and other health initiatives		49	104	134	134	134	134
Total	255	147	364	589	589	589	589
New partnerships with Aboriginal peoples		49	144	159	159	159	159
Crime prevention	13	95	128	159	159	159	159
Furthering international cooperation	187	55	80	80	80	80	80
Addressing environmental challenges	12	18	17	17	17	17	17
Other
Equalization-technical improvements		48	97	145	194	225	225
Official languages in education		70	70	70	70	70	70
Parks Canada	35
Compensation and benefit issues in the military		175	175	175	175	175	175
Total	4,002	657	2,075	3,394	3,943	3,974	3,974
Building a strong economy
Building on the Canadian Opportunities Strategy
Creating knowledge
Canada Foundation for Innovation²	100
Support for advanced research	16	50	55	55	55	55	55
Disseminating knowledge		27	42	27	27	27	27
Commercializing knowledge		121	232	317	317	317	317
Supporting employment		265	265	265	265	265	265
Total	116	463	594	664	664	664	664
Economic adjustment
Canadian Fisheries Adjustment and Restructuring Program	600	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	664	664
Total spending initiatives	5,359	1,765	2,821	4,127	4,628	4,638	4,638
Tax expenditures and general tax actions
Building a secure society
Increase in Canada Child Tax Benefit			225	300	300	300	300
General tax relief and fairness measures
Extension of $500 supplement to all taxpayers		665	1,110	1,290	1,499	1,742	2,025
Increase in tax-free income by $175		270	450	525	613	715	834
Elimination of 3% surtax		595	995	1,150	1,329	1,536	1,776
Tax fairness measures		15	25	100	100	100	100
Reduction in 1999 EI premiums	300	1,250	1,250	1,250	1,250	1,250	1,250
Total	300	2,795	3,830	4,315	4,791	5,343	5,985
Tax expenditures and general tax actions	300	2,795	4,055	4,615	5,091	5,643	6,285
Total spending and tax initiatives	5,659	4,560	6,876	8,742	9,718	10,281	10,923

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.

Table A1.8
Spending and Tax Initiatives: February 1998 Budget

	1997–1998	1998–1999	1999–2000	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005


	(millions of dollars)
The Canadian Opportunities Strategy
Millennium Scholarship Foundation	2,500
Canada Study Grants		100	103	57	120	120	120	120
Increased funding for granting councils		120	135	150	150	150	150	150
Student Loans Program		50	145	150	158	158	158	158
Canada Education Savings Grant		267	334	434	334	500	500	500
Connecting Canadians to information and skills	55	60	70	75	75	75	75	75
Supporting youth employment		50	75	100	100	100	100	100
Total	2,555	647	862	965	937	1,103	1,103	1,103
Building a secure society
Increase in CHST cash floor	200	900	1,500	1,500	1,400	1,200	1,000	800
Other health initiatives
National AIDS Strategy		41	41	41	41	41	41	41
Canadian Breast Cancer Initiative		7	7	7	7	7	7	7
Sustaining Canada’s blood system		55	55	25	25	25	25	25
Hepatitis C	800
Tobacco Demand Reduction Strategy		10	10	10	10	10	10	10
Total	800	113	113	83	83	83	83	83
Total	1,000	1,013	1,613	1,583	1,483	1,283	1,083	883
Support for families
Increased funding for employability
Assistance for persons with disabilities		15	20	20	20	20	20	20
New partnership with Aboriginal people	350	126	126	126	126	126	126	126
Promoting Canadian culture and sports	43	103	153	153	153	153	153	153
Strengthening communities		42	67	67	67	67	67	67
Environmental efficiency and innovation		94	94	94	94	94	94	94
Furthering international cooperation	90	70	20	20	20	20	20	20
Total	483	435	460	460	460	460	460	460
Total spending initiatives	4,038	2,110	2,955	3,028	2,900	2,866	2,666	2,466
Tax expenditures and general tax actions
The Canadian Opportunities Strategy
Credit for interest on student loans		80	130	145	155	165	165	165
Lifelong learning (RRSPs)		15	40	45	50	55	55	55
Part-time education tax credit (includes part-time CCED)		25	90	90	90	90	90	90
EI premium holiday for youth			100	100
Total		120	360	380	295	310	310	310

Table A1.8
Spending and Tax Initiatives: February 1998 Budget (cont’d)


	1997–1998	1998–1999	1999–2000	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005

	(millions of dollars)
Building a secure society
Deductibility of health/ dental insurance premiums			90	110	125	125	125	125
Caregiver credit		30	120	125	130	130	130	130
Canada Child Tax Benefit			320	750	850	850	850	850
Child care expense deduction		20	45	45	45	45	45	45
Disability measures		5	5	5	5	5	5	5
Alternative Min. Tax and RRSPs		70	20	20	20	20	20	20
Emergency services		5	10	10	10	10	10	10
Total		130	610	1,065	1,185	1,185	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	1,566	1,634
Tax relief for low-income taxpayers		170	270	315	330	346	350	355
Reduction in EI premiums	235	725	725	725	725	725	725	725
Tax fairness measures		-5	-25	30	35	41	41	41
Total	235	1,600	2,145	2,435	2,520	2,610	2,682	2,755
Tax expenditures and general tax actions	235	1,850	3,115	3,880	4,000	4,105	4,177	4,250
Total spending and tax actions	4,273	3,960	6,070	6,908	6,900	6,971	6,843	6,716

Table A1.9
Summary of Spending and Tax Actions Since 1997 Budget

	1997–1998	1998–1999	1999–2000	2000–2001	2001–2002	2002–2003	2003–2004	2004–2005	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	6,200	11,300	8,800	10,100	47,500
Other health initiatives	800	368	260	1,947	872	1,592	1,241	1,468	8,546
Other	483	697	880	2,765	2,981	3,598	4,689	4,045	20,128
Total	1,483	5,465	5,139	7,212	10,053	16,490	14,729	15,614	76,183
Building a strong economy
Canadian Opportunities Strategy	2,555	763	2,829	3,069	4,150	4,784	5,303	4,935	28,388
Economic adjustment		1,241	645	152	69	850	1,560	1,113	5,630
Total	2,555	2,004	3,474	3,221	4,219	5,634	6,863	6,048	34,018
Providing essential public services			1,974	2,167	3,930	4,793	5,204	5,312	23,379
Expenditure reallocation							-1,000	-1,000	-2,000
Total spending initiatives	4,038	7,469	10,587	12,599	18,201	26,917	25,796	25,972	131,580
Tax expenditures and general tax relief
Canadian Opportunities Strategy		120	360	460	1,025	1,485	1,795	2,065	7,310
Building a secure society
Canada Child Tax Benefit			320	1,450	2,430	2,855	3,370	4,010	14,435
Other		130	290	340	160	75	105	140	1,240
General tax relief		880	2,975	8,446	16,068	19,258	23,979	29,599	101,205
Tax fairness measures		-5	-35	0	105	-364	-379	-379	-1057
EI premium reductions	235	1,025	2,320	3,467	4,449	4,955	5,808	6,533	28,792
Tax expenditures/ general tax actions	235	2,150	6,230	14,163	24,237	28,264	34,678	41,968	151,925
Total spending and tax initiatives	4,273	9,619	16,817	26,762	42,438	55,181	60,474	67,940	283,505

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		Last Updated: 2003-02-18

Annex 1 Spending and Tax Relief Since the 1997 Budget

Annex 1
Spending and Tax Relief Since the 1997 Budget