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Focusing on Priorities
Slide show presentation transcript
Slide 1
Slide 2
Budget 2006 is about focusing on priorities - delivering real results for
people, and laying a solid foundation for Canada's future.
It implements the new Government's five core commitments; restores discipline
and accountability to spending; provides tax relief for all Canadians; and
reduces public debt each year.
Slide 3
Underlying the Budget plan is a healthy economy - with forecasters expecting
continued growth this year and next.
This ongoing growth is reflected in Canada's employment record. Over 100,000
new jobs were created in the first quarter of 2006, helping bring the
unemployment rate to 6.3 per cent in March - the lowest since December 1974.
Slide 4
But there are some risks. These include:
- Commodity prices, especially in the energy sector;
- The possibility of a sudden 'correction' in U.S. housing prices;
- And the risk that our dollar may appreciate further under pressure from
global current account imbalances, especially in the U.S.
That's why the Budget Plan is based on -- and delivers -- fiscal discipline.
And while this means the Government was not able to do everything it would have
liked, its first Budget will make a real difference for Canadians.
Slide 5
It does this through providing a focused, responsible agenda to build a
better Canada - starting by addressing the five priorities set out in the
Speech from the Throne.
Slide 6
It begins by building on the reforms of the Federal Accountability Action
Plan introduced last month.
This means focusing budget decisions over a two-year planning horizon - so
that measures will be introduced only when they are affordable and ready to be
implemented.
Budget 2006 restrains the rate of growth of spending, and commits to a new
approach to overall expenditure management - to ensure that programs focus on
results and deliver value for money. The President of the Treasury Board will
identify $1 billion of savings in 2006-07 and 2007-08 and report in the Fall.
And the Budget plans on reducing the public debt by $3 billion each year. As
a result, it advances by one year the goal of lowering the debt-to-GDP ratio to
25 per cent.
Slide 7
Budget 2006 also announces that the Government will look at possibly
allocating a portion of any year-end surplus over $3 billion to the Canada
Pension Plan and the Quebec Pension Plan - to improve fairness for younger
Canadians.
And financial reporting will be improved - for example, on federally-funded
foundations - consistent with recommendations by the Auditor-General.
Slide 8
This Budget also recognizes that Canadians pay too much tax. So it delivers
more tax relief for people than the last four federal budgets combined - and
puts more than twice as much resources into tax relief as into new spending.
And about 90 per cent of the tax savings will go to individual Canadians and
their families.
Slide 9
The Budget 2006 tax plan delivers on the Government's commitment to cut the
GST by one percentage point - to 6 per cent - effective this July 1.
This will benefit all Canadians by close to $9 billion over two years - even
those who don't earn enough to pay personal income tax.
And even though the GST rate is being cut, the Budget keeps the GST Credit
at current levels - to protect low- and modest-income Canadians.
Slide 10
But that's not all. The Budget also proposes a comprehensive plan to reduce
personal income taxes for all taxpayers. This includes:
- Introducing a new Canada Employment Credit to help working Canadians. This
year, effective July 1st, the credit will be available on employment income
up to $500 - then doubling to $1,000 for 2007.
- Permanently reducing - to 15.5 per cent - the lowest personal income tax
rate as of July 1st. This is the rate that applies on the first $36,000 of
income.
- And legislating increases in the basic personal amount - the amount of
income Canadians can earn tax-free.
Slide 11
These measures will help deliver about $20 billion in tax relief for people
over the next two years. And, as a result, about 655,000 low-income Canadians
will be removed from the tax rolls.
Slide 12
Next, creating an environment for more and better jobs and for strong
economic growth depends on having a competitive tax system. So Budget 2006
delivers on tax relief promised - but not delivered in the past - by:
- Eliminating the federal capital tax as of January 2006;
- Eliminating the corporate surtax starting in 2008; and
- Reducing the general corporate tax rate to 19 per cent from 21 per cent by
2010.
Slide 13
These proposed cuts will allow Canada to regain the solid statutory tax rate
advantage that we had prior to the 2004 tax changes in the United States.
Slide 14
Budget 2006 recognizes small business as the backbone of our economy. So it
proposes to:
- Increase the amount of small business income eligible for the 12-per-cent tax
rate to $400,000 for 2007.
- And to reduce this rate to 11.5 per cent in 2008, and to 11 per cent in 2009.
Slide 15
Canadians know that a more educated and skilled labour force is key to our
economic future. That's why this Budget proposes significant support for
training and education.
Starting immediately, there will be a new tax credit of up to $2,000 for
employers who hire apprentices.
And in January 2007, a new Apprentice Incentive Grant will provide $1,000 per
year to apprentices in the first two years of an eligible program.
Since many trades-people must provide their own tools to get work, the Budget
proposes a new deduction of up to $500 for the cost of tools.
Further, to help about 1.9 million post-secondary students, a tax credit will
be provided for the cost of textbooks.
And the Budget proposes to fully exempt from tax all scholarship, bursary or
fellowship income - providing tax relief to more than 100,000 students.
Slide 16
Moving ahead, Canada's primary economic sectors are facing serious
challenges at home and internationally.
The Government is keeping its commitment to provide an additional $500 million
in support for the agriculture sector - and going even further. It is
announcing an immediate $1-billion to assist farmers this year. Together, this
means $1.5 billion in new funding this year for Canadian farmers.
And it commits $400 million over the next two years to the forestry sector, to
help combat the pine beetle infestation, support worker adjustment and to
strengthen the industry's long-term competitiveness.
Slide 17
The federal Budget also offers wide-ranging measures to help families with
children - one of the new Government's priorities - and to make our communities
better places to live and work.
This starts with a Universal Child Care Plan, which has two key components.
There is $3.7 billion in funding over two years for a Universal Child Care
Benefit - which will give all families $100 per month for each child under age
6.
This will benefit some 1.5 million families with over 2 million children.
And it's important to note: This Benefit will not affect federal income-tested
benefits - and several provinces have already said they too will not claw back
the money.
Slide 18
As well, the Budget plan will invest $250 million each year, starting in
2007, in a new initiative to increase the number of childcare spaces by 25,000
each year - a total of 125,000 spaces over five years.
Slide 19
Further Budget investments in helping people include:
- Increasing the Child Disability Benefit and making it available to more
families;
- Providing a tax credit on up to $500 in eligible fees for fitness programs
for children under 16;
- Helping pensioners, by doubling to $2,000 the current maximum amount of
eligible pension income that can be claimed tax free; and
- Assisting newcomers by reducing the Right of Permanent Residence Fee to $490
from $975, effective immediately.
Slide 20
This Budget also works to improve the environment we live in, including the
infrastructure that links and supports our communities. For example:
- It proposes a new tax credit for people who purchase public transit passes,
to ease traffic congestion and improve the environment.
- And it provides some $5.5 billion over the next four years for a new Highways
and Border Infrastructure Fund, a Public Transit Capital Trust, and for
established infrastructure programs such as the Pacific Gateway Initiative.
Slide 21
The Budget also encourages charitable donations by eliminating the capital
gains tax on donations of listed securities to public charities.
And it helps to preserve natural areas by exempting donations of ecologically
sensitive land from the capital gains tax.
Slide 22
Another of the five core priorities in the Speech from the Throne was to
make our streets safe and our borders secure. Budget 2006 offers funding to:
- Add 1,000 more RCMP officers -- and additional federal prosecutors -- to
focus on issues such as drugs and gun-smuggling;
- To arm border officers and eliminate 'work alone' posts; and
- To further improve Canada's pandemic preparedness.
And this Budget sets out a total investment of $5.3 billion over five years -
starting with more than $1 billion over two years -- to strengthen the Canadian
Forces.
Slide 23
Building a stronger, more cooperative federation must be a priority for
every government. The federal Budget delivers, by working to restore fiscal
balance in Canada.
This includes a commitment to work with the provinces and territories to
develop a Patient Wait Times Guarantee for medically necessary services.
Budget 2006 also provides up to $3.3 billion in funding to help provinces and
territories address short-term pressures in areas such as post-secondary
education, Northern and off-reserve Aboriginal housing, and public transit.
And it delivers an extra $255-million, one-time adjustment in the Equalization
and Territorial Financing Formula programs that will benefit recipient
provinces and territories.
Slide 24
As well, Budget 2006 offers a framework on fiscal arrangements. This is
outlined in a Budget companion document, "Restoring Fiscal Balance in
Canada," that identifies five key principles all Canadians can support.
These are:
- Accountability through clarity in the roles and responsibilities of the
orders of government;
- Fiscal responsibility and transparency in budget planning;
- Predictable, long-term fiscal arrangements;
- Competitiveness and efficiency of the Canadian economic union; and
- Effective collaborative management of the federation.
Slide 25
As you can see, the new Government's first Budget takes real action to keep
promises and address core priorities. And it does so with an emphasis on the
forward-looking fiscal discipline that Canadians expect and deserve.
For the year just ended - 2005-06 - the current outlook is for a surplus of
about $8 billion, which will go to reduce the federal debt.
Looking ahead, Budget 2006 fiscal planning is based on debt reduction of $3
billion each year.
And reflecting a more transparent approach to fiscal reporting, this Budget
projects unallocated surpluses of $600 million this year, and $1.4 billion in
2007-08.
Slide 26
This reflects the Government's commitment - which lies at the heart of
responsible government - to control how and where tax dollars are spent.
In recent years, federal program expenses have been growing at an unsustainable
rate - spiking sharply in 2004-05.
Budget 2006 will reverse this trend by cancelling a number of initiatives
announced by the previous government. As a result, spending will slow this year
and next, to a pace below the rate of growth of the economy - bringing it to 13
per cent of the economy.
Slide 27
To sum up, Budget 2006 is about focusing on Canadians' priorities. It
delivers real results for people, and does so in a fiscally responsible way. As
a result, it sets the stage for future action - as the financial resources
become available - to build an even better Canada for all Canadians.
Slide 28
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