1986 Canadian federal budget

Michael Wilson and the Mulroney government's second national spending plan Budget of the Canadian Federal Government 1986 Canada 1985 Canadian federal budget 1985 1987 Canadian federal budget 1987 26 February 1986 33rd Progressive Conservative Michael Wilson 86.746 billion 116.588 billion $29.842 billionCanada's deficits and surpluses, 1963-2014 http://www.cbc.ca/news2/interactives/canada-deficit/ CBC News CBC/Radio-Canada 25 April 2015 The Canadian federal budget for fiscal year 1986–87 was presented by Minister of Finance Michael Wilson in the House of Commons of Canada on 26 February 1986. 27 February 1986 Ottawa Citizen https://news.google.com/newspapers?nid=QBJtjoHflPwC&dat=19860227&printsec=frontpage&hl=fr live https://web.archive.org/web/20200625173055/https://news.google.com/newspapers?nid=QBJtjoHflPwC&dat=19860227&printsec=frontpage&hl=fr 2020-06-25 2020-06-17 news.google.com Background Taxes Tax increases The budget imposed a series of new taxes to increase government revenues:Budget Speech 15-16 A 3% surtax on all individuals starting on 1 July 1986; The surtax instituted by the previous budget is continued until its scheduled end. The two surtaxes are in effect simultaneously from 1 July to 31 December 1986.The general surtax is applied at a rate of 1.5% on income earned during the whole of 1986.S.C. 1986, ch. 55 s 66 A 3% surtax on all corporations starting on 1 January 1987; The previous 5% on large corporation is set to expire on 31 December 1986, as originally planned;Notice of Ways and Means clauses 44-45 A 1% increase in the federal sales tax rate effective 1 April 1986; Increases in excise taxes and duties on alcohol (4% increase) and tobacco (6% increase) with immediate effect. Tax incentives The budget announced two improvements to social assistance tax incentives: The creation of the refundable federal sales tax credit, a new refundable tax credit of up to $50 per person per year;Budget Papers 19-20 A prepayment system is instituted for the child tax credit : advance payments are to be maid in November 1986 to claimants with low-income. Revenue Canada will used past tax returns to automatically assess eligibility.Budget Papers 19-20 Corporate tax reform The budget announced a reform of the corporate tax system: several tax incentives are abolished and a schedule of corporate tax rate decrease is announced.Notice of Ways and Means clauses 46-47Budget Papers 28 DateCorporate tax rate Base rate M&PManufacturing and processing income. Small businessApplies of a maximum of $200,000 income eligible for the small business deduction. As of budget date 36% 30% 15% 1 July 1987 35% 28% 14% 1 July 1988 34% 27%13 % 1 July 1989 33% 26% Expenditures The budget announced the government would ask members of the House of Commons and Senate to take a $1,000 pay cut in 1986, matching an identical cut to the salary of the Prime Minister and all cabinet ministers. The salaries of deputy ministers and political staff was also to be frozen in 1986, with other executives public servant to receive pay increases not exceeding 2%.Budget Speech 7 Cuts of $500 million in non-statutory spending for 1986–87 was also announced, with details to be released after the budget. Official Development Assistance (i.e. international aid) was to be cut by $83 millions and $203 millions (in 1986–87 and 1987–88 respectively) despite the government's pledge to bring the ODA budget to 0.6% of GNP by 1990.Budget Speech 9 Privatization The budget announced the privatization efforts were to continue with multiple state-owned corporations to be sold to the private sector.The budget lists notably : Canadian Arsenals, Northern Canada Power Commission, remaining assets of the Canada Development Investment Corporation, Teleglobe, Canadair and Eldorado Nuclear.Budget Speech 8 Reactions Media Most newspapers focused on the tax increases announced in the budget (notably the surtax and the excise tax increases) with the following front page headlines: Income, alcohol, cigaret taxes up in Wilson's deficit-cutting budgetChristopher Waddell Income, alcohol, cigaret taxes up in Wilson's deficit-cutting budget The Globe and Mail 27 February 1986 Ottawa A1 en The Globe and Mail OUCH: Wilson puts $1.5-billion bite on taxpayers to cut deficitOUCH: Wilson puts $1.5-billion bite on taxpayers to cut deficit The Ottawa Citizen Ottawa 27 February 1986 A1 en https://news.google.com/newspapers?nid=QBJtjoHflPwC&dat=19860227&printsec=frontpage&hl=fr The Ottawa Citizen Income tax, levies on booze, tobacco rise to fight deficitTerrance Wills Income tax, levies on booze, tobacco rise to fight deficit The Gazette Montreal 27 February 1986 A1 en The Gazette (Montreal) fr Hausse d'impôts de $1,5 milliardMaurice Jannard Hausse d'impôts de $1,5 milliard https://numerique.banq.qc.ca/patrimoine/details/52327/2253213 22 October 2024 La Presse 27 February 1986 Montréal A1 fr $1.5 billion tax hikes yes La Presse The Globe and Mail editorial received the budget favorably, pointing at several welcome initiatives (corporate and sales taxes reform, tightening of tax incentives) and overall commitment to fiscal responsibility.The budget's teeth The Globe and Mail 27 February 1986 Ottawa A6 en Frédéric Wagnière in La Presse was more nuanced, pointing that the mix between tax increases and budget cuts seemed to focus more on the former, with a risk of hindering the economic recovery.Frédéric 1 Wagnière Un budget trop austère https://numerique.banq.qc.ca/patrimoine/details/52327/2253214 22 October 2024 La Presse 27 February 1986 Montréal A2 fr Aftermath Execution + Budgetary items in billions of dollarsElement 1985-19861986-1987 ActualReceiver General of Canada Public accounts of Canada 1 October 1987 I : Summary Report and Financial Statements Supply and Services Canada Ottawa 0-660-12525-0 https://archive.org/details/v1publicacc1987canauoft 22 October 2024 BudgetBudget Speech 24Budget Papers 8 Actual Tax revenues 71.6187.30 79.87 Non-tax revenues 5.22 5.91Program expenditures (85.79) (89.37) (89.73) Public debt charge (25.44) (27.38) (26.66) Deficit (34.40) (29.50) (30.61) Non-budgetary transactions 4.13 6.90 9.04 Financial requirements (30.27) (22.6) (21.57) Notes and references Notes References Budget documents The Budget Speech 26 February 1986 Ottawa https://budget.canada.ca/archives/1986-sd-eng.pdf 21 October 2024 en Budget Speech Budget Papers 26 February 1986 Ottawa https://publications.gc.ca/collections/collection_2016/fin/F1-23-1986-eng.pdf 21 October 2024 en Budget Papers Draft and enacted legislation Department of Finance Technical Notes to a Notice of Ways and Means Motion Relating to Income Tax October 1986 Ottawa https://publications.gc.ca/collections/collection_2016/fin/F34-27-1986-eng.pdf 21 October 2024 en 103 Notice of Ways and Means An Act to amend the Income Tax Act and a related Act S.C. 1986 55 https://archive.org/details/actsofparl1986v02cana/page/1631/mode/1up S.C. 1986, ch. 55 1986 Category:1986 government budgets Category:1986 in Canadian politics Budget, 1986 Budget, 1986 Category:February 1986 in Canada