Presented | 23 May 1985 |
---|---|
Parliament | 33rd |
Party | Progressive Conservative |
Finance minister | Michael Wilson |
Total revenue | 77.742 billion [1] |
Total expenditures | 111.131 billion [1] |
Deficit | $33.389 billion [1] |
‹ 1984 1986 › |
The 1985 Canadian federal budget for fiscal year 1985-1986 was presented by Minister of Finance Michael Wilson in the House of Commons of Canada on 23 May 1985. This is the first federal budget under the premiership of Brian Mulroney, and generally increased taxes. [2]
The budget is the first presented in the 33rd Canadian Parliament following the 1984 federal election during which the Progressive-Conservatives won a landslide majority. The previous fiscal year (1983-84) saw, at the time, the largest post-war deficit of the federal government at 37.16 billion. [1]
We're asking that Canadians pay 1$ more per day in taxes to make a better world
— Micheal Wilson, 1985 Budget speech
The budget brought significant changes to income taxes, notably:
Several revenue increase measures were also announced:
A temporary 5% surtax on large corporations was announced, effective between 1 July 1985 and 30 June 1986. The surtax does not apply to income eligible to the small business deduction. [15]
A temporary 1% surtax on the capital tax payable by large financial institutions effective between 1 January 1986 and 31 December 1987. The surtax is calculated as 1% of capital in excess of $200 million. The surtax was deductible for corporate income taxes [16]
The Federal Sales Tax rates are increased on 1 January 1986: [17]
The previous 1% temporary increase, slated to end on 31 December 1988, is permanently extended. [17]
The federal sales tax exemption is repealed for the following goods: [18]
Various excise taxes were increased in the budget:
The budget follows the signature of the Western Accord between the federal government and the governments of Alberta, British Columbia and Saskatchewan that was slated to enter into force on 1 June 1985. [20] The budget introduced measures to implement the Accord, notably:
The budget garnered generally mixed reaction. On 24 May 1985, several newspapers' main headline focused on the tax increases:
Columnist Alain Dubuc of La Presse pointed out that the budget was disappointing in that it did not drastically reduce the federal deficit while containing few measures for job creation and several tax increases. [23] Most French-language columnists pointed out the uncertainty over the success of the measures announced in the budget. [24]
Jeffrey Simpson of The Globe and Mail painted a nuanced picture of the budget pointing overall that the return to “fiscal sanity” was long overdue. [25] L. Ian MacDonald of The Gazette expressed that the budget was a risky gamble, increasing taxes on the middle class and providing tax incentives to businesses could provide politically explosive should the recovery not materialize. [26]
The budget garnered a very positive reaction from former Quebec finance minister Jacques Parizeau. He applauded the courage of the deindexation and the repeal of the RHOSP as a way to inject $2 billion into the economy. [27]
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