1992 Canadian federal budget

Background

Taxes

Personal income taxes

• Reduction in the personal surtax rate: the general personal surtax rate is lowered by 1 percentage point on and another on.
• Introduction of the Home buyers' plan : the budget created the HBP to allow individuals to withdraw up to $20,000 from their RRSPs to finance the purchase of a principal residence, repayable over 15 years.
• Creation of the Child Tax Benefit : starting the CTB replaced family allowances, the child credit and the refundable child credit. The initial CTB amount is set at $1,020 with a supplement of up to $500 for low-income families.
• Increase of the child care expense deduction: the maximum deduction is increased by $1,000 ;
• The increase in the RRSP and RPP limits is delayed by a year.

  Corporate income taxes

• Reduction in the manufacturing and processing tax rate: phased-in two steps, 22% on and 21% on ;
• Faster depreciation for selected equipment: the CCA deduction rate for eligible manufacturing and processing machinery and equipment is increased from 25 to 30%.

  Other taxes

• The withholding tax on direct dividends is reduced to 5% from 25%.

  Expenditures

Expenditure Control Plan

Cuts

• The Prime Minister and all cabinet ministers took a 5% pay cut on ;
• Departments' budget were further cut by 3% between 1992-93 and 1996-97 and spending reductions of $170 millions in 1992-93 alone were imposed ;
• Federal departments' communication budgets were cut by $75 millions ;
• Defence spending was cut by $2.2 billions over the 1992-93 to 1996-97 years ;
• 24 federal agencies are abolished or merged ;
• 13 ministerial advising bodies are abolished or merged.

  Spending limitations

• New travel guidelines were introduced to reduce costs ;
• Growth in spending on social housing by the CMHC was capped at 3% yearly until 1996-97.

  Reactions

Opposition

Business community and labour unions

Provinces