- The deficit for 2012-13 is estimated at $25.9 billion, very close to the projection of last fall’s Update.
- For 2013-14 the deficit is budgeted at $18.7 billion, falling to $6.6 billion in 2014-15. A surplus of $0.8 billion is projected for 2015-16.
- Real GDP growth is projected at 1.8% in 2012, 1.6% in 2013 and an average 2.5% from 2014 through 2016. In nominal terms the projection is 3.1% in 2012, 3.3% in 2013 and 4.7% in each of the following two years.
- Spending cuts in today’s budget are expected to save $509 million in 2013-14 and a total of $8.4 billion over six years.
- The effective rate of the income tax credit for non-eligible dividends is reduced to 11% from 13.33%.
- The temporary Hiring Credit for Small Business is expanded and extended through 2013.
- Beginning in 2014-15, $500 million annually will be allocated to the Canada Job Grant, involving an overhaul of existing agreements with the provinces and territories.
- New measures to support manufacturing include extension through 2015 of the temporary accelerated capital cost allowance for new investment in machinery and equipment (cost $1.4 billion over four years) and renewal of funding for the Federal Economic Development Agency for Southern Ontario ($920 million over five years).
- Maintenance of support for national, regional and local infrastructure projects through a new Building Canada Fund ($14 billion over 10 years) and renewal of the P3 Canada Fund ($1.25 billion over five years).
- Several initiatives to ensure the integrity of the tax system, including a ban on the use of government-insured mortgages in the management of the capital and liquidities of financial institutions.
The deficit for the year ending March 31 is estimated at $25.9 billion, a tad less than projected in last fall’s Update. A revenue shortfall of $1.2 billion ($0.2 billion net of the $1 billion adjustment for risk in the Fall Update), plus a $1.3 billion addition to direct program spending due to a projected increase in Atomic Energy of Canada obligations arising from asset writedown and waste management, were offset by a $1-billion reduction in transfers to individuals (mainly employment insurance benefits and benefits to seniors, as a result of lower unemployment and inflation rates) and a $0.5-billion reduction of debt service cost.
The 2013-14 revenues budgeted today are $3.4 billion less than those projected in the Fall Update, a reduction only partly offset by a $1.5 billion reduction in program spending. New measures in today’s budget are expected to add $0.4 billion to the deficit. Thus the budgeted deficit of $18.7 billion for 2013-14 is $2.2 billion higher than was projected last fall. It is in the following year, 2014-15, that the projected fiscal deficit becomes less than that projected in the Fall Update.
Projected revenues remain lower, this time by $3.2 billion, but program spending is revised down $3.8 billion (before today’s new measures) and debt service is revised down $0.7 billion. Today’s new measures to support jobs and growth are budgeted to increase spending by $0.9 billion, but $1.6 billion is to be recovered through reduction in expenses and in tax spendings (mainly closing of tax loopholes and improved tax system fairness such as lower dividend tax credit, phasing out of the federal tax credit for labour-sponsored venture capital corporations, phasing out of the supplementary credit for credit unions, elimination of tax benefits from leveraged life-insurance arrangements) and enhancement of CRA compliance programs.
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