1992 Canadian federal budget
The 1992 Canadian budget was a Canadian federal budget for the Government of Canada presented by Minister of Finance Don Mazankowski in the House of Commons of Canada on 25 February 1992. It was the fourth budget after the 1988 Canadian federal election. It is the first budget presented by Don Mazankowski.
| Presented | 25 February 1992 |
|---|---|
| Parliament | 34th |
| Party | Progressive Conservative |
| Finance minister | Don Mazankowski |
| Total revenue | 124.486 billion [1] |
| Total expenditures | 163.505 billion [1] |
| Deficit | $39.019 billion[1] |
‹ 1991 1993 › | |
Background
The budget is presented amid poor economic conditions and soaring federal deficit.
Taxes
The 1992 budget introduced significant changes to both personal and corporate income tax systems.
Personal income taxes
- Reduction in the personal surtax rate: the general personal surtax rate is lowered by 1 percentage point (to 4%) on 1 July 1992 and another (to 3%) on 1 January 1993.[pap 1]
- Introduction of the Home buyers' plan (HBP): the budget created the HBP to allow individuals to withdraw up to $20,000 from their RRSPs to finance the purchase of a principal residence, repayable over 15 years.[pap 2]
- Creation of the Child Tax Benefit (CTB): starting January 1993 the CTB replaced family allowances, the child credit and the refundable child credit. The initial CTB amount is set at $1,020 with a supplement of up to $500 for low-income families.[pap 3]
- Increase of the child care expense deduction: the maximum deduction is increased by $1,000 ;[pap 4]
- The increase in the RRSP and RPP limits is delayed by a year.[pap 5]
Corporate income taxes
The budget reduces taxes imposed on corporations by $2 billions over the 1992-93 to 1996-97 period. The budget specifically provides relief to the manufacturing and processing industries that have been seriously affected by the recession.[2]
- Reduction in the manufacturing and processing tax rate: phased-in two steps, 22% on 1 January 1993 (down from 23%) and 21% on 1 January 1994 ;[pap 6]
- Faster depreciation for selected equipment: the CCA deduction rate for eligible manufacturing and processing machinery and equipment is increased from 25 to 30%.[pap 7]
Expenditures
Expenditure Control Plan
The Expenditure Control Plan announced in the 1990 budget and extended in 1991 is continued and broadened in the 1992 budget.[pap 9]
Cuts
- The Prime Minister and all cabinet ministers took a 5% pay cut on 1 April 1992 ;
- Departments' budget were further cut by 3% between 1992-93 and 1996-97 and spending reductions of $170 millions in 1992-93 alone were imposed ;
- Federal departments' communication budgets were cut by $75 millions ;
- Defence spending was cut by $2.2 billions over the 1992-93 to 1996-97 years ;
- 24 federal agencies are abolished or merged ;
- 13 ministerial advising bodies are abolished or merged.
Spending limitations
- New travel guidelines were introduced to reduce costs ;
- Growth in spending on social housing by the CMHC was capped at 3% yearly until 1996-97.
Reactions
Opposition
The Liberal leader of the Official Opposition in Ottawa Jean Chrétien, and the NDP leade Audrey McLaughlin, criticized the budget for its lack of measures to fight unemployment. The Bloc québécois leader Lucien Bouchard pointed out the budget was a proof that the federal government was at the end of its rope.[3]
Business community and labour unions
The budget was well received by the business community and especially real-estate and construction actors[4]. The value of the Canadian dollar increased by 0.39 cents with respect to the United States dollar in the foreign exchange market the day after the budget speech. The TSX 300 index gained 35.52 points while the Montreal Stock Exchange index gained 19.39 points.[5]
Quebec's labour unions (CSN, CEQ and FTQ) were disappointed by the budget pointing out the lack of measures to fight unemployment and poverty and the lack of new infrastructure projects. The unions also criticized the abolition of the Economic Council of Canada.[4]
Provinces
Quebec's finance minister, Gérard D. Levesque, received the budget favourable talking about a step in the right direction in that it did not reduce transfers to provinces.[6]
The PQ, the Official Opposition in Quebec, on the other hand decried the budget as cosmetic and not going far enough to fight unemployment although some tax relief measures (and especially the reduction in the personal surtax) were applauded.[6]
Ontario's NDP Finance minister Floyd Laughren also criticized the lack of measures to fight unemployment.[3]
Notes
- "Canada's deficits and surpluses, 1963-2014". CBC News. CBC/Radio-Canada. Retrieved 25 April 2015.
- Jannard, Maurice (26 February 1992). "La fiscalité des entreprises est réduite de deux milliards" (in French). Montréal: La Presse. pp. A4.
- "Rien pour contrer le chômage: la récession va durer longtemps, disent les chefs de parti". La Presse. The Canadian Press. 26 February 1992. p. B1.
- Gilbert, Mario; Dansereau, Suzanne. "Le milieu des affaires est satisfait du budget, les syndicats ne le sont pas" (in French). Montréal: La Presse. pp. B1. Retrieved 19 June 2020.
- Beauregard, Valérie (27 February 1992). "Le budget dope le dollar" (in French). Montréal: La Presse. p. D1. Retrieved 19 June 2020.
- Lessard, Denis (26 February 1992). "Québec accueille favorablement le budget, le PQ le juge « cosmétique »" (in French). Montréal: La Presse. p. A3. Retrieved 19 June 2020.