Magazine article CMA - the Management Accounting Magazine

Trendlines - a Provincial Budget Summary

Magazine article CMA - the Management Accounting Magazine

Trendlines - a Provincial Budget Summary

Article excerpt

Most provinces hope to achieve a surplus, or at least a reduced deficit, in the 1997-98 fiscal year. The budget deficits range from Ontario's Canada-wide high of $667 per capita, in 1996/97 - reduced from $809 per capita in 1995/96, to Prince Edward Island's low of $50 per capita in 1996/97 - from a $23 per capita surplus in 1995/96. Alberta, Saskatchewan, Manitoba, New Brunswick, and Nova Scotia have succeeded in reporting budget surpluses.

Personal tax rate cuts

This year New Brunswick followed the trend of reducing basic personal income tax rates. Ontario, British Columbia and Nova Scotia confirmed that tax cuts, announced in 1996, will proceed. However, increased surtaxes will eat into any benefit from reduced basic tax rates for higher income taxpayers in Ontario and British Columbia. Albertans are bucking the trend - taxpayers in that province voted to reject an offer to scrap their flat tax, and high income surtax, in favor of debt reduction and increased spending in essential areas such as health care.

Most other personal tax changes announced in the 1997 provincial budgets were targeted to benefit specific groups such as the working poor, children, and students.

Quebec - a distinctly taxed society

Quebec's 1997 budget contained several unique tax changes that may well show up in future federal and provincial budgets. A major personal tax simplification measure will take effect in 1998. Under the simplified tax system, taxpayers can choose a lumpsum deduction instead of a number of common tax deductions and credits. Spouses, who both choose the new system, can elect to file a joint return.

Quebec's new reporting system for tips earned by employees in the restaurant and hotel industry provides that the tips received must be remitted to the employer for redistribution to other employees, and for source deductions to be withheld.

On the corporate front

Prince Edward Island stands alone in raising corporate income tax rates - its general corporate rate rose to 16 per cent (up from 15 per cent) on July 1, 1997. In other provinces, rates remain the same, but special tax credits were introduced to stimulate activity.

Ontario introduced tax credits for qualified investment in computer animation, business research, co-operative education, new technology, book publishing, and a graduate transition program. It also enhanced the existing credit for film and television production.

Saskatchewan has extended the Investment Tax Credit, for plant and equipment acquisitions for use in manufacturing and processing, to include used equipment brought into Saskatchewan on which sales tax is not payable. …

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