Budget in Brief 1998 - 3
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Archived - Building a Secure Society

This budget provides funding for initiatives announced over the past year, including increased health and social transfers to the provinces; renewal of Canada's blood system in partnership with the provinces; a new partnership with aboriginal peoples; implementation of the international landmines treaty; and increased support for Canadian culture. The budget also proposes new initiatives to help build a secure society.

Support for Families With Children

Building a National Child Benefit System

• In the 1997 budget, the government allocated $850 million through the new Canada Child Tax Benefit which will be fully in place by July of this year -- increasing support to over one million children and their families. In this budget, as part of the National Child Benefit System, the government is allocating a further $850 million to enrich the Canada Child Tax Benefit -- $425 million as of July 1999 and an additional $425 million as of July 2000. The federal government will announce details of the enrichment after discussions with provincial and territorial partners and Canadians.

Helping Families With Child Care Expenses

• The limit on the child care expense deduction will be increased from $5,000 to $7,000 for children under age 7, and from $3,000 to $4,000 for children age 7 to 16. This measure will help 65,000 families with children.

Helping Individuals Caring for Family Members

• For Canadians providing care and support for family members who are elderly or disabled, the budget proposes a new caregiver credit that will reduce federal tax by up to $400. This will benefit about 450,000 caregivers.
• A tax exemption will be provided relating to the goods and services tax and the harmonized sales tax for expenses incurred from providing care to a person who has limited means of self-care.

Assisting Persons With Disabilities

• Existing homeowners will be allowed to take advantage of the Home Buyers' Plan to purchase a more accessible home or a home for a dependant relative with disabilities.
• Occupational therapists and psychologists will be allowed to certify eligibility for the disability tax credit.
• Caregivers will receive tax assistance for training courses related to the care of dependant relatives with disabilities.
• Students with disabilities using RRSPs for lifelong learning will be exempt from the requirement that their studies be on a full-time basis.

Improving Canada's Health Care System

• As a result of the government's improved fiscal performance, the first and most significant initiative it took was to introduce legislation to increase the Canada Health and Social Transfer (CHST) cash floor from $11 billion to $12.5 billion, as recommended by the National Forum on Health. The 1998 budget confirms this expenditure which will provide provinces with nearly $7 billion more in cash from 1997-98 to 2002-03.
• It also confirms resources totalling $211 million over five years for the National HIV/AIDS Strategy and $60 million over two years to renew Canada's blood system.
• To promote advanced medical research and graduate study, this budget allocates an additional $134 million to the Medical Research Council over the next three years.

Deducting Health and Dental Premiums for Self-Employed Canadians

• To improve equity in the treatment of self-employed Canadians, owner-operators of businesses will now be able to deduct premiums for health and dental insurance against their business income.

Sustaining the Retirement Income System

• Last year, the federal government and eight provincial governments agreed on changes that ensure the Canada Pension Plan will be sustained.
• In the months ahead, the government will move on to the next stage in preserving the pension system. Legislation will be introduced to put in place the Seniors Benefit which, in the early years of the next century, will replace the current system of Old Age Security and the Guaranteed Income Supplement. The government has consulted with seniors and other interested groups on the details of this reform. It has listened very carefully and will give every consideration to the valuable points they have raised concerning the package that was first put forward in 1996.
• To increase the fairness of private tax-assisted saving for retirement, contributions to RRSPs will no longer trigger the alternative minimum tax. This will be of particular benefit to individuals who roll over severance pay into an RRSP or who make use of the liberalization in the rules for the lifetime carry-forward of RRSPs provided in the last two budgets.

Strengthening Communities and the Voluntary Sector

Emergency Services Volunteers

• To support the thousands of Canadian volunteers who provide essential emergency services, the tax-free allowance for volunteer firefighters will be doubled -- from $500 to $1,000. This allowance will also be extended to all other emergency service volunteers, effective January 1, 1998.
• To expand the technological capacity of the voluntary sector, this budget provides funding for Voluntary Sector Network Support as part of the $205 million being provided for SchoolNet and the Community Assistance Program.

Assisting Rural Canadians

• As announced in Securing Our Future Together, funding of $20 million over the next four years will be provided to support a multi-departmental Canadian Rural Partnership initiative. Building on a broad range of programs and services already in place to support rural Canadians, this will engage rural communities and examine new ways of delivering information and programs.

Supporting Northern Ontario Communities

• Current funding of $20 million annually will be maintained after 1998-99 for the Federal Economic Development Initiative for Northern Ontario (FedNor). This puts FedNor funding on an ongoing basis, similar to regional development funding in other parts of the country.

Building a New Partnership With Aboriginal Peoples

• The budget confirms funding for Gathering Strength, the federal response to the Royal Commission on Aboriginal Peoples. A $350 million fund has been set aside for a Healing Strategy to help address the legacy of abuse in residential schools. Another $126 million has been allocated to new and expanded aboriginal programs.

Addressing Environmental Challenges

• To address the challenge of climate change, the government is committed to working in collaboration and partnership with provincial governments, business, consumers and environmental groups. The budget provides $50 million a year over three years for climate change-related initiatives.
• The government will also be consulting widely on the complex issues associated with developing an international emissions trading system, which offers scope to achieve emissions reductions at lower cost and in a more market-oriented way than conventional regulation.
• In addition, as reflected in Securing Our Future Together, the budget provides funding of $34 million annually for the National Research Council's Industrial Research Assistance Program (IRAP) to help small and medium-sized businesses to foster strategic innovation and implement state-of-the-art technologies and approaches for using energy, water and natural resources more efficiently and for preventing pollution.

Promoting Canadian Culture and Sports

• The Canada Television and Cable Production Fund has been an unqualified success, supporting quality Canadian television programs and some 19,600 full- and part-time jobs across Canada. To maintain the Fund at $200 million annually, the budget confirms increased funding of $50 million for 1998-99, and $100 million for 1999-2000 and 2000-01.
• The budget also confirms funding for a number of initiatives announced earlier this year by the Minister of Canadian Heritage, including increased support for the Canada Council, the Canadian book publishing industry and for Canadian athletes and their coaches.

Furthering International Co-operation

• The budget confirms funding of $100 million over five years to help meet the goals of the international treaty banning anti-personnel landmines.
• The government will also devote an additional $90 million for international assistance in 1997-98 and $50 million the following year for initiatives in the areas of environment, health, youth and governance.

General Tax Relief for Canadians

With the federal government's books in balance, one of the government's goals is to reduce taxes. This reduction is part of an overall strategy to achieve the nation's economic and social objectives. To this end, tax relief has been, and will continue to be, provided on the following basis.

• First, certain critical economic and social priorities cannot wait, as postponing action on them would impose net costs on Canadians. In such cases, targeted tax reductions generate a payoff to the country that far exceeds any revenue loss.
• Second, general tax relief will be provided only when fiscal resources permit. The size of such tax relief, and who gets it, will depend critically on the size of the fiscal dividend.
• Third, the tax system must be fair. This implies that Canadians should pay taxes consistent with their ability to pay and that taxes owed are indeed paid.

Consistent with this framework, all four of the government's previous budgets undertook targeted tax reductions to achieve economic and social objectives by providing assistance to education, children, charities and the disabled. These budgets also improved tax fairness.

This budget builds on that approach. It provides additional targeted tax relief through the Canadian Opportunities Strategy and through measures designed to build a more secure society.

Personal Income Tax Relief: The First Steps

This budget also begins the process of general income tax relief, primarily for low- and middle-income Canadians. The budget proposes two measures in this regard.

• As of July 1, the government is raising the amount of income that can be earned tax free by low-income single Canadians by $500 and by $1,000 for a family. As a result, 400,000 people will be removed from the tax rolls completely, and federal tax will be reduced for an additional 4.6 million Canadians.
• Also effective July 1, taxpayers earning between $50,000 and about $65,000 will see the 3-per-cent general surtax reduced, and 83 per cent of taxpayers -- those earning up to about $50,000 -- will see it eliminated in its entirety. Taken together, these two measures will provide tax relief to 14 million Canadians -- 90 per cent of all taxpayers.

The general tax relief and targeted tax measures in this budget amount to $7 billion over the next three years.

Conclusion

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