Economic Statement and Budget Update 2000: 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, tax relief and debt reduction 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, and the 2000 Statement, 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 the end of 1999-2000 and the commitment in this Statement to reduce public debt by at least  $10 billion in 2000-01.

Tax relief since 1997-98 has been of two forms – targeted tax relief and general tax relief. Targeted tax relief measures include the Canada Child Tax Benefit, the education credit, the credit for interest on student loans, and the caregiver tax credit, among others. While netted against revenues in the Government’s financial statements, these targeted tax relief measures in many respects share features similar to spending initiatives. They provide benefits to targeted groups – benefits which could be delivered through spending programs. Consistent with this approach, the relief for heating expenses is treated as targeted tax relief in Table A1.1. It will be delivered through the tax system to individuals and families receiving payments under the goods and services tax credit. This relief will be recorded as part of program spending.

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 the 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 targeted tax relief measures 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 2002-03 period is  $170.1 billion. With targeted tax measures included in spending, the cumulative amount of spending initiatives is  $79.0 billion – 46.5 per cent of the total – compared to general tax relief and EI premium rate reductions of  $62.4 billion and debt reduction of  $28.7 billion – 53.5 per cent of the total.

If the targeted tax relief measures are included as part of overall tax relief, new spending initiatives amount to  $65.4 billion – 38.4 per cent of the total – tax reduction amounts to  $76 billion and debt reduction amounts to  $28.7 billion – 61.6 per cent of the total. The debt reduction total includes the actual reduction in public debt to date and the  $10 billion commitment for 2000-01.

Table A1.1
Cumulative Amount of Spending, Tax Relief and Debt Reduction
From 1997-98 to 2002-03

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 39.3 23.1 49.3 29.0
Making Canada’s economy more innovative 18.4 10.8 21.9 12.9
Providing essential public services 7.7 4.5 7.7 4.5
Total spending initiatives 65.4 38.4 79.0 46.5
Tax expenditures and general tax relief
Tax expenditures
Making Canada’s economy more innovative 3.4 2.1
Improving the quality of life of Canadians 10.0 5.9
Tax fairness measures 0.2 0.1
General tax relief 46.2 27.1 46.2 27.2
EI premium reductions 16.2 9.5 16.2 9.5
Total tax initiatives 76.0 44.7 62.4 36.6
Debt reduction 28.7 16.9 28.7 16.9
Total 170.1 100.0 170.1 100.0
Note: Numbers may not add due to rounding.

Table A1.2
Spending and Tax Initiatives Since the 2000 Budget
2000-01 2001-02 2002-03

(millions of dollars)
Spending initiatives
Improving the quality of life for Canadians and their children
Canada Health and Social Transfer 2,800 3,600
Other health initiatives 1,500 200 200
Employment insurance benefits 200 450 500
Heating expense relief 1,345
Total 3,045 3,450 4,300
Making Canada’s economy more innovative
Canada Foundation for Innovation 500
Social Sciences and Humanities Research Council 20 20
Clean environment 100 100
Total 500 120 120
Total spending initiatives 3,545 3,570 4,420
Tax expenditures and general tax actions
Improving the quality of life for Canadians and their children
Canada Child Tax Benefit 260 355
Caregiver credit/disabilities 25 100 110
Total 25 360 465
Making Canada’s economy more innovative
Education credit 10 225 230
Capital gains inclusion rate 20 175 485
Flow-through shares 5 35 40
Total 35 435 755
General tax relief and fairness measures
Personal income tax relief 1,395 5,745 6,380
Corporate income tax reductions 160 1,140
Reduction in EI premium rates1 100 300
Total 1,495 6,205 7,520
Tax relief 1,555 7,000 8,740
Total 5,100 10,570 13,160
1 Assumes employee premium rate of  $2.25 for 2001,  $2.20 for 2002 and  $2.10 for 2003.

Table A1.3
Spending and Tax Initiatives: February 2000 Budget
1999-00 2000-01 2001-02 2002-03

(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 in 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
Making the economy more competitive
Capital gains inclusion rate 15 135 230
Rollover of capital gains 20 75 75
Taxation of gains on qualifying stock options 10 75 75
Total 45 285 380
General tax relief and fairness measures
Personal income tax relief 2,790 4,385 5,615
Corporate income tax reductions -65 250 310
Fairness measures -25 -55 -30 -25
Reduction in EI premium rates2 345 1,392 2,174 2,980
Total 320 4,062 6,779 8,880
Total tax initiatives 320 4,582 8,084 10,610
Total spending and tax initiatives 6,186 7,672 11,957 14,563
Note: Numbers may not add due to rounding.
1 The 1999-2000 CHST cash supplement was paid into a third-party trust in 2000-01.
2 Assumes a 10-cent-per-year reduction in employee premium rates for 2001, 2002 and 2003.

Table A1.4
Spending and Tax Initiatives: February 1999 Budget
1998-99 1999-2000 2000-01 2001-02 2002-03
(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 innovation2 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 Opportunities 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 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
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
Note: Numbers may not add due to rounding.
1 A 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 Changed from 1999 budget.

Table A1.5
Spending and Tax Initiatives: February 1998 Budget
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(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
Lifelong learning (RRSPs) 15 40 45 50 55
Part-time education tax credit (includes part-time child care expense deduction) 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 tax 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
Note: Numbers may not add due to rounding.
1 Revised from February 1998 budget.

Table A1.6
Summary of Spending and Tax Actions in 1998, 1999 and 2000 budgets, and 2000 Economic Statement and Budget Update
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 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 7,300 24,600
Other health initiatives 800 368 260 1,947 872 872 5,118
Other 483 697 1,054 3,003 2,597 3,050 10,883
Total 1,483 5,465 5,313 7,450 9,669 11,221 40,601
Building a strong economy
Canadian Opportunities Strategy 2,555 763 2,829 3,069 3,317 3,708 16,241
Economic adjustment 1,241 645 152 69 21 2,128
Total 2,555 2,004 3,474 3,221 3,286 3,729 18,369
Providing essential public services 1,974 2,167 2,039 1,560 7,739
Total spending initiatives 4,038 7,469 10,761 12,837 15,093 16,509 66,708
Tax expenditures and general tax relief
Canadian Opportunities Strategy 120 360 460 1,015 1,445 3,400
Building a secure society
Canada Child Tax Benefit 320 1,450 2,430 2,855 7,055
Other 130 290 340 435 445 1,640
General tax relief 880 2,975 8,355 15,265 18,730 46,205
Tax fairness measures -5 -35 0 105 116 181
EI premium reductions 235 1,025 2,320 3,467 4,449 4,955 16,215
Total 235 2,150 6,230 14,072 23,699 28,545 74,696
Total spending and tax initiatives 4,273 9,619 16,991 26,909 38,793 45,055 141,404
Note: Numbers may not add due to rounding.

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