Ottawa - Tuesday, February 25, 2003 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation


Budget 2003 — entitled Building the Canada We Want — is historic for many reasons. It is the last Budget for which Jean Chrétien will be the Prime Minister. It was Finance Minister John Manley’s first — and likely last — budget. And, it is the biggest spending budget Canada has seen since the days of Trudeau.




In fact, program spending from the period 1996/1997 through to 2004/2005 will have increased by 46% according to recent budget figures. This increase is almost double the rate of inflation and population growth over the same period and violates the Budget 2000 promise to restrain spending growth to the population growth and inflation parameters.




While most commitments in the budget are spread over five years, their scope is nonetheless immense:
  • $34.8 billion for health care;
  • $1.3 billion for aboriginal health care;
  • $600 million for water and wastewater treatment on reserves;
  • $935 million for child care;
  • $320 million for affordable housing;
  • $125 million for federal granting councils;
  • $190 million in extra funding to the Business Development Bank of Canada;
  • $2 billion (on top of $1.7 billion already) for Climate Change;
  • $340 million for other environmental projects;
  • $2.4 billion for the military over three years; and
  • $3 billion for cities over 10 years.



by volume

This list just covers explicit announcement from the Budget Speech before even cracking the cover of the 382-page budget document. True to Chrétien form, this year’s budget continues to measure government performance by how much the government spends as opposed to evaluating what we’re getting for record levels in program spending.



income tax

On the taxation front, federal personal income taxes as percentage of the economy remain virtually unchanged at 7.40% of GDP, higher than when the Liberals came to power in 1993. Ottawa continues to dine out on individual taxpayers to satiate the lion’s share of its revenue appetite. In 2003/2004 personal income taxes alone will account for 47.12% of all federal revenues collected, their second highest level since 1993.



capital tax

Of course there were a few bright lights in Minister Manley’s dark, big-time spending sky. Measures to phase out the corporate capital tax — as advocated by the Canadian Taxpayers Federatioin — will occur over the next five years. But if the feds really want to spur “innovation”, this $1.4 billion tax should be eliminated over two years, not five.




As well, Employment Insurance premiums will decrease in 2004 by 12 cents for each $100 dollars of insurable earnings. This translates into savings of $47 for employees and $65 for employers per each employee at the maximum contribution level. However, payroll taxes are still up 40% over the past 12 years so this relief must be kept in perspective.




The government announced that it was reducing the air travelers security charge — aka the flying tax — by $5.00 on domestic flights reducing the total domestic round trip charge from $24 to $14. But again, this tax was — and still is — a horrendous example of shoddy public policy. The feds never did explain the difference between improvements that benefited public safety in general and those that were of unique benefit to Canadians that travel by airplane.




All in all, Budget 2003 gets a failing grade for imperiling our fiscal future and heralding a return to big-government which put us in our fiscal mess in the first place.

Walter Robinson
Federal Director

  Department of Finance Budget 2003 page with summaries, the complete speech and various presentations outlining the measures in the 2003 budget.
  CBC News summary of the 2003 Budget


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