What You Won't See in the Next Federal Budget

Contact:

Joel Emes, Research Economist
The Fraser Institute, (604) 714-4542, Email: joele@fraserinstitute.ca

Release Date: 11 February 1999

VANCOUVER, BC, 11 February 1999—As Finance Minister Paul Martin prepares to release the 1999 Federal Budget on February 16, The Fraser Institute is warning that the size of government must continue to shrink and sizable cuts in the personal taxes must be instituted if Canada is to maximize its economic growth.

Calls to cut taxes or to further reduce the federal debt have been ignored on the misguided basis that these policies would jeopardize the balanced budget and put the country back on the path of deficit financing. Instead, pre-budget discussion has largely focused on the size of the current budget surplus, and how much additional spending should be put towards health care.

The Institute has released their The Fraser Institute Backgrounder on the 1999 Federal Budget, that discusses several key points:

The level of taxes depends on the level of spending. Tax cuts will never be significant if the bulk of the surplus is spent every year. Last year’s budgetary surplus was largely pledged to new spending.

In addition, total spending by the federal government will be approximately 18.3 percent of GDP in 1999—3.7 percentage points higher than the spending rate that would maximize economic growth.

Significant tax and debt relief and reduced federal government spending can be achieved without risking a deficit. A recently published Fraser Institute paper Using Cash Rebates for Tax Relief Without Risk, details a plan to cut taxes and debt without the risk of deficits.

"Tax cuts and debt reduction could be announced this year without risk of a deficit. Canadians will suffer if we continue to ignore the size of government and spend most of the surplus each year," says Research Economist Joel Emes.

Established in 1974, The Fraser Institute is a public policy organization based in Vancouver.

For more information, or a copy of The Fraser Institute Backgrounder on the 1999 Federal Budget, contact:

Suzane Walters, Director of Communications
The Fraser Institute, (604) 714-4582, Email: Email suzannew@fraserinstitute.ca

info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580

You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.