The Canada Budget 2011-12 will allow the federal government to address financial issues through better economic growth and interest rates that are presently at the lowest in Canada�s history.
It is expected that for the 2011 financial year, fiscal deficit will amount to $40.5 billion, which is almost $5 billion lesser than what had been estimated in October 2010.
The federal government is looking to reduce the shortfall by $9 billion to $11 billion on an yearly basis, so that debts can be eliminated by 2015. For the 2016 financial year, a surplus of $4 billion has been forecasted.
Highlights of Canada Budget 2011-12:
Federal debt to be limited to 34 percent in 2012 fiscal.
Federal debt to be restricted to less than 30 percent by 2016 fiscal.
Debt service to be increased to $39.5 billion by 2015 fiscal.
Introducing various stimulus packages, increasing expenditure in financial aid provided to industries, senior citizens and environmental causes and programs.
Personal income tax relief to be provided in 2012 mainly via several tax credits that have an estimated worth of $300 million.
Aggregate financial worth of issued federal gross bond issuance to go up to $102 billion in 2012 from $96 billion in 2011.
As per the new debt plan, for the medium term, the focus will be on issuing bonds for 2, 3 and 5 years.
Canadian Federal Budget 2011-12 Revenue Support:
In 2011, the federal government is expected to earn $3.1 billion more than what had been forecasted during the estimate done in October 2010. This will be equivalent of a 7.8 percent increase.
In fiscals 2012 and 2013, the average economic growth is expected to remain 6 percent.
The nominal GDP for 2011 fiscal is supposed to go up by $24 billion.
Canada Budget 2011-12 Debt Service and Debt Developments:
The low interest rates have helped to create some space for additional expenditure. For the 2012 fiscal, the projected interest charges are $33 billion.
The estimated Other Comprehensive Income for 2011 fiscal is $3.1 billion.
Canada Budget 2011-12 Effects on Program Spending:
It is expected that till 2016 fiscal, the average yearly growth for program related expenses will be 1.6%.
The restraint measures adopted by the federal government in its 2010 budget are presently on target. Severance benefits provided to retiring or resigning employees will not be provided in 2012 fiscal. Government operations are presently being streamlined to reduce experience and red-tapism.
Canada Budget 2011-12 Economic Action Plan:
$0.9 billion would be spent in 2012 for infrastructural projects. This financial assistance will cover programs that were initiated in March 2011:
Building Canada Plan introduced in the 2007 budget
Support for federal infrastructure
Construction of bridges
Permanent yearly allotment of $2 billion to be directed towards municipal infrastructure. This money will be provided via the Gas Tax Fund.
Near term support will be provided to several initiatives for achieving long term economic growth:
Accelerated straight-line depreciation of 50% for buying equipment and machinery for processors and manufacturers.
Maximum hiring credits of $1000 for EI premiums to be paid to small employers in 2011 fiscal.
Work sharing agreement extension by a maximum of 16 weeks.
Improvement in Wage Earner Protection Program for workers who have been affected by the bankruptcy of their employers.
Addition to the Targeted Initiative for Older Workers.
Industrial financial assistance of $60 million that will be provided to forestry for tapping into and innovating international business opportunities.
$80 million to be provided to Industrial Research Assistance Program that will help in growth and ICT adoption of small and medium business enterprises.
Funding to be provided to Genome Canada and 3 federal research granting bodies.
30 new Industrial Research Chairs to be instituted in colleges.
$400 million will be provided in fiscal 2012 to environmental initiatives such as ecoENERGY Retrofit-Homes program, monitoring programs and protection of the Great Lakes.
A number of measures for increasing personal income and supporting various communities will be adopted. They are as follows:
An increase of $300 million for the Guaranteed Income Supplement for Seniors program.
New tax credits to be provided to family caregivers, children s arts, volunteer firefighters.
Doctors and nurses ready to operate in underprivileged communities will now be provided deductions in federal student loans.
Canada Budget 2011-12 Dealing with Tax Loopholes:
It is expected that as a result of the tax loophole measures adopted in the Canada budget 2011-12, the federal government would raise $240 million in 2012 fiscal and approximately $1 billion in 2014 fiscal.
Anti-avoidance rules, applicable for Registered Retirement Income Funds and Registered Retirement Savings Plans, are expected to generate $100 million per year for the government.
Canada Budget 2011-12 Financial Services:
A policy for demutualization of federally administered, casualty mutual insurance companies and property will be created.
The federal government will make official the present mortgage insurance rules and regulations of Canada Mortgage and Housing Corporation and private companies.
Initiatives for improving financial literacy.
Developing consumer protection rules for developing prepaid cards from branded networks.
Unwanted credit card cheques will be done away with.
Expectations from Canada Budget 2011-12:
Even if the Canada budget works as per assumptions, it would not make much impact on national economy. The government is now in a position to provide necessary support to the economy and play a crucial role in terms of debt reduction. This is expected to be a major advantage for Canada over several first world countries.
Income Estimates – Till 2016:
Following is the list of estimated income till 2016 fiscal year:
|Personal Income Taxes||113.3||119.9||128.1||151.5|
|Employment Insurance Premiums||17.5||18.9||20.8||24.8|
|Corporate Income Taxes||28.6||32.1||32.7||38.9|
|Goods and Services Taxes||29.1||30.1||31.8||36.8|
Expenditure Estimates – Till 2016:
Following is the list of estimated expenditure till 2016 fiscal year:
|Employee Insurance Benefits||20.1||19.5||18.9||19|
|Direct Program Expenditures||123.5||119.1||117.3||120.5|
|Transfers to Other Canadian Governments||53||56||57.5||65.6|