1990 Canadian federal budget

The Canadian federal budget for fiscal year 1990–1991 was presented to the House of Commons of Canada by finance minister Michael Wilson on 20 February 1990. It was the second budget after the 1988 Canadian federal election.

1990 (1990) Budget of the Canadian Federal Government
Presented20 February 1990
Parliament34th
PartyProgressive Conservative
Finance ministerMichael Wilson
Total revenueC$119,685,000,000
Total expendituresC$153,584,000,000
DeficitC$33,899,000,000
‹ 1989
1991 ›

Taxes

The 1990 budget did not introduce major tax change as income taxes were reformed in prior years and the Goods and Service tax was scheduled for implementation on January 1, 1991.

Although not part of the 1990 budget, three major taxes changes are implemented as of January 1, 1991:[1]

  • The individual surtax on high-income is increased to 5% of federal taxes in excess of $12,500 (instead of 3% of taxes owed over $15,000);
  • The Large Corporation Tax introduced in April 1989 is increased to 0.2% of taxable capital over $10 million (instead of 0.175%);
  • A new Refundable Goods and Services Tax Credit of $190 per adult replaces the Refundable Sales Tax Credit.

Expenditures

Expenditure Control Plan

The 1990 budget sets out a control plan for expenditures and was predicted to yield $2.8 billion in savings in fiscal year 1990-91 and $3.3 billion in fiscal year 1991-92. This control plan complements the expenditure reductions of December 1989. Most government transfers to individuals, including old age pensions, child allowances, veterans' benefits and unemployment insurance, were not included.

5%-growth

Some programs were constrained to a 5%-annual growth until 1992:

  • Science and Technology (National Research Council, Canada's space program, Scholarships...);
  • Department of Indian Affairs and Northern Development;
  • Canada Assistance Plan (CAP, a cost-sharing program consisting of transfers to province for social assistance programs);
  • Defence spending;
  • Foreign aid

Programs frozen until 1992

Some programs are frozen altogether:

Budget cuts

Programs Eliminated
  • Incentives for exploration of natural resources provided by the Canadian Exploration Incentives Program (CEIP) are eliminated after February 19, 1990. The CEIP was introduced in 1988 to help resource companies raise capital following the market crash of 1987.
  • The OSLO Project of development of oil sands in Northeastern Alberta;
  • The Polar 8 Project.

Reactions

Opposition

Herb Gray, interim leader of the Official Opposition, rejected many features of the budget, notably the cuts to transfers to provinces and capping of research and science budget. Paul Martin, Liberal MP and candidate to the leadership of the Liberal Party, also rejected the budget as a symbol of the Conservatives' mismanagement of the economy.[2]

Audrey McLaughlin, leader of the New Democratic Party held that the budget would not help students or homeless people and decried the lack of environmental measures, despite prior ambitious declarations made by the Prime Minister Brian Mulroney and the Minister of Environment Lucien Bouchard.[2]

Provinces

The budget is characterized by Gérard D. Levesque, Quebec's finance minister, as a smokescreen and an unfair budget. He particularly criticizes the cuts to EPF as a tentative to download the federal deficit onto the provinces and the abolition of the Canadian Exploration Incentives Program that benefited mine exploration in Quebec rural areas (and especially Abitibi). The minister warns that the federal budget will likely lead tax increases for Quebec taxpayers to offset the downfall in revenues.[3]

References
  1. Department of Finance, Notice of Ways and Means Motion Relating to a Goods and Services Tax. 1989.
  2. Tison, Marie (21 February 1990). "Le budget Wilson précipitera le Canada dans la récession, affirme le chef de l'Opposition". Le Soleil. The Canadian Press. Retrieved 7 January 2020.
  3. Pépin, André (21 February 1990). "Levesque : un budget trompe-l'oeil et injuste". La Presse. Retrieved 6 January 2020.
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