Budget 2000
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Introduction

Canada is now in an era of budget surpluses.

When the Government took office, it set out a plan to restore the nation’s finances, build a stronger, more innovative economy and improve the quality of life for all Canadians. The plan is working.

The deficit is eliminated, the debt burden is falling, the unemployment rate is at its lowest level in more than two decades and disposable income is increasing.

With a growing economy and the nation’s finances in order, this budget charts a course to greater prosperity in the 21st century.

This budget:

Maintaining Sound Financial Management

Canadians have achieved a financial turnaround of historic proportions by eliminating a $42-billion deficit in four years.

For the first time in almost 50 years, since 1951-52, Canada has recorded back-to-back surpluses:

The Government is committed to balanced budgets or better in 1999-2000, 2000-01 and 2001-02.

This would be the first time in 50 years that the budget has been in balance or surplus for five consecutive years. In fact, since Confederation there have been only two other occasions when the Government of Canada recorded balanced budgets or better at least five years in a row.

The Debt Repayment Plan and sustained economic growth will ensure that the debt-to-GDP ratio – the level of the debt in relation to the country’s annual income – remains on a permanent downward track. From a post-war peak of 71.2 per cent in 1995-96, it is expected to fall to about 55 per cent by 2001-02, and should fall to below 50 per cent by 2004-05.

Total program spending in the coming year will be $4 billion below the 1993-94 level.

Canada Health and Social Transfer

Universal health care and quality education are the highest priorities of Canadian families.

This budget increases CHST support for post-secondary education and health care by $2.5 billion. Starting in 2000-01, CHST cash will reach $15.5 billion, almost 25 per cent higher than in 1998-99.

The 1999 budget increased CHST funding for health care by $11.5 billion over five years – the Government’s single largest investment ever.

The increase in this budget means that total CHST transfers to provinces and territories will reach an all-time high of almost $31 billion in 2000-01.

Tax Relief for Canadians

The Five-Year Tax Reduction Plan, which places a special emphasis on families with children, will reduce personal income taxes for all taxpayers, especially middle- and lower-income Canadians, by:

Other measures in the tax plan will help Canada to become more competitive internationally by:

Under the most important structural changes to the federal tax system in more than a decade:

The tax plan will provide immediate tax reductions that will grow over time.

In 2001 a typical:
  • one-earner family of four with about $32,000 of income will receive more benefits under the CCTB and the goods and services tax (GST) credit than it will pay in personal income taxes. This means that the family will pay no net tax;
  • one-earner family of four with $40,000 of income will have its net personal income taxes reduced by 17 per cent; and
  • two-earner family of four with $60,000 of income will have its net personal taxes reduced by almost 9 per cent.
By 2004 a typical:
  • one-earner family of four with earnings of about $35,000 will pay no net personal tax;
  • one-earner family of four earning $40,000 will have its net personal income taxes reduced by at least $1,623 a year, a reduction of 48 per cent; and
  • two-earner family of four with income of $60,000 will have its net income taxes reduced by at least $1,546 a year – a reduction of 27 per cent.

Restoring Full Indexation

Full indexation will:

Substantial Tax Cuts for Middle-Income Canadians

Middle-income Canadians will receive substantial tax relief under the Plan.

An average family of four will pay $600 less in income tax next year and $900 less a year when the lower rate is fully in place.

Some income now taxed at the middle tax rate will be taxed at the lowest rate, while other income taxed at the top tax rate will be subject to the middle rate.

This surtax and the 3-per-cent general surtax were implemented in the 1980s to help reduce the deficit. With the deficit eliminated, the 1998 and 1999 budgets eliminated the general surtax.

Our Children, Our Future

Governments can help parents meet their children’s needs by providing improved income support and services.

That is why the Government is increasing the CCTB by $2.5 billion a year by 2004 to more than $9 billion annually, and doubling the duration of maternity and parental leave under the Employment Insurance Program.

Raising and Extending the Canada Child Tax Benefit

The CCTB is the Government’s primary means for helping families with the costs of raising children. With the enhancements proposed in the budget, about 3.8 million families, including more than 90 per cent of all children in Canada, will receive benefits.

The objective is to increase the maximum CCTB benefit to $2,400 for a family’s first child and to $2,200 for a second child by 2004. This will be done in several steps.

Benefits will also increase for middle-income families.

CCTB Benefits by Income Level for a Two-Child Family - overpae.gif (40,958 bytes)

Doubling Parental Leave

This budget doubles the duration of employment insurance (EI) maternity and parental leave to one year from the current maximum of six months. This extended leave will be available to parents with a child born or adopted on or after December 31, 2000.

This will be done by increasing parental leave to 35 weeks from the current maximum of 10. Combined with 15 weeks of maternity leave and the standard two-week waiting period, the amount of child-related leave will double.

To make maternity and parental leave more accessible, the budget also lowers to 600 from 700 the number of hours that must be worked to be eligible for leave.

In addition, parents will be able to work part-time while receiving benefits, in the same way as regular EI claimants.

Finally, when both parents share the leave, only one waiting period will apply rather than two, as is currently the case. As a result, parents will have greater flexibility in choosing whether one or both spend time at home with a new child.

These changes will benefit some 150,000 families a year at an estimated annual cost of $900 million.

Children With Disabilities

This budget builds on measures in previous budgets to assist parents of children with disabilities. It proposes:

Innovation

The economies that will thrive in the modern global economy will be those that excel at innovation.

That is why this budget proposes initiatives totalling more than $4 billion between 1999-2000 and 2002-03 to promote leading-edge research in universities, research hospitals and the private sector; promote environmental technologies and improved practices; and strengthen provincial and municipal infrastructure.

Investing in Innovation, Knowledge and Skills

This budget:

Promoting Environmental Technologies and Practices

The Government will allocate $700 million between 1999-2000 and 2002-03 to develop new environmental technologies and improved practices in co-operation with provinces, municipalities, the private sector and non-governmental organizations.

The budget proposals include support for a renewed Climate Change Action Fund, a Sustainable Development Technology Fund, the new Canadian Foundation for Climate and Atmospheric Sciences, new municipality-based initiatives for clean air and water, a National Strategy on Species at Risk and the Great Lakes Action Plan.

Strengthening Provincial and Municipal Infrastructure

The federal government will work with other orders of government and the private sector to reach an agreement by the end of 2000 on a multi-year plan to improve provincial and municipal infrastructure in cities and rural communities across Canada.

To that end, the federal government is allocating $450 million over the next two years and $550 million a year for the next four years thereafter.

How Can I Get More Information on Budget 2000?

Information is available on the Internet at http://www.fin.gc.ca/

You can also obtain copies of this brochure or other budget documents from the

Department of Finance Canada
Distribution Centre
300 Laurier Avenue West
P1 West Tower
Ottawa, Canada
K1A 0G5

Tel.: (613) 995-2855
Fax: (613) 996-0518

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