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25 Tax Memo 1 (1961)

handle is hein.journals/taxmmo25 and id is 1 raw text is: TAX MEMO No. 25 January, 1961 PROVINCIAL FINANCES 1960-61 The lack of two-way stretch in the provincial revenue structures is dramatically illustrated by the fact that eight out of ten provinces are budgeting for a deficit in the current fiscal year, 1960-61. This becomes evident only when current and capital expenditures are combined and the strands of the various provincial treasurers' budget presentations are separated and rewoven into a set of comparable statistics. The Dominion Bureau of Statistics has just released such an analysis of the provincial ::ti. ates for 1960-61. The analysis shows that the provinces expect to take in a total of $2,550 million and to spend $2,756 million. The excess of expenditure over revenue will approximate $206 million-about 8% of revenue. Com- pared with preliminary figures for the pre- vious year, revenues will be up by $106 million (4%), expenditures by $170 million (7%) and the excess of expenditures over revenue will be up by nearly $64 million. The only provinces forecasting a surplus in their budgets were Prince Edward Island and Quebec which anticipated $.6 million and $3.5 million respectively. However, since its original budget was adopted, Quebec has had a change of government and the new provincial treasurer has brought in supplementary estimates totalling $144 mil- lion which are not included in this analysis. Taxes are expected to bring in nearly half of provincial revenues, yielding an estimated $1,236 million in the current year. About 21% of revenue ($536 million) will come from the federal government in the form of tax-sharing payments and subsidies. Another 21% ($531 million) is estimated to come from privileges, licences and permits. Three-quarters of provincial expendi- tures are budgeted for transportation, health, social welfare and education-a total of $2,095 million. This amount is split almost evenly between the three major functions: 26% to transportation and communication; 26% to health and social welfare; and 24% to education. Over the past five years revenues of pro- vincial governments have increased by $939 million, or about 58%. Expenditures have jumped by $1,183 million, a 75% increase. As sources of revenue, taxes are now rela- tively more important and privileges, licences and permits and liquor profits rela- tively less important than in 1955-56. Of the major expenditures, outlays for education have increased most since 1955-56 whereas debt charges have declined relatively. Payments to local authorities in 1960-61 will approximate $658 million-about 24% of all provincial outlays. Direct debt of the provinces at March 31, 1959 totalled $3,178 million, a 32% increase over March 31, 1954. Indirect debt went up by 118% in the same period to $2,681 million. A more detailed analysis of provincial finances appears in the following pages. Additional copies of this pamphlet are available at 15 cents per copy. CANADIAN TAX FOUNDATION