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1995
Social Policy Beyond the Budget
Note: The electronic version of this document does not contain the charts and graphs. Hard copies of this document are no longer available.
I. INTRODUCTION
The CCSD
Founded in 1920, the Canadian Council on Social Development (CCSD) is an independent, national,
non-profit organization. Led by a volunteer board of directors from across Canada, the CCSD has
a broad mandate focused on issues of social and economic security. We are a non-partisan,
membership-based organization that links concerned individuals and organizations from coast to
coast. We form a national network that includes professionals in human service organizations,
volunteers, union members, businesses, academics, and government departments, who share a
commitment to social progress.
The Budget in Context
Faced with a rising debt burden, persistent annual deficits, volatile currency markets, and calls for
both deep spending cuts and "no new taxes," the federal government introduced a budget that cut
deeper, harder and faster than any other in recent memory. This budget attempted to reduce the
deficit, make the federal government smaller and reduce its role, and appease foreign investors. The
federal government said this was necessary in order to respond to the forces of globalization and the
growth of public debt. There is an implicit assumption that if these criteria are met, all else including
social development will follow. In fact, there are other, very serious problems facing Canada,
problems that will not be solved indirectly by improving the competitiveness of Canadian exports,
having the best GDP growth among the G7 nations, maintaining low inflation, or even through
successful deficit reduction. Canada has amassed a serious social deficit in recent years, one that
requires direct and concerted action.
The Social Deficit
The "new economy" presents many challenges and opportunities. It is said that adaptability and
knowledge are key criteria in today's rapidly evolving global marketplace, and for those who are able
to meet these criteria, there are many possibilities. But not everyone has adapted, and not everyone
will easily find a place in this "new economy."
Our rapidly changing economy has placed tremendous strains on Canadian families, workers, and
their children. Following are some of the symptoms of the broader social and economic problems that
the Canadian government should be addressing: four of 10 young families and eight of 10 among
families headed by a single mother live in poverty; ballooning numbers of working poor (a 30%
jump since 1981); a growing income gap $5 billion moved from low and middle income earners
to those with high incomes during the 1980s; an explosion in the number of food banks; growing
numbers of homeless beggars on the streets; increasing stress borne by families, especially by women
trying to juggle work and family responsibilities; the lack of quality subsidized child care, growing
numbers of "latch-key" kids; growing youth crime; an aging population and the imminent strain this
will place on the health care system and pensions; family and community breakdown; and, an
increasingly turbulent labour market that affords less and less economic security to Canadian families.
We cannot ignore the fact that our drive for global competitiveness, coupled with a decade of
cutbacks to our social safety net, have left many Canadians on the sidelines.
A Holistic Vision
Canadians need a vision that goes beyond deficit reduction and smaller government. In establishing
national priorities, the government must be guided by a collective vision of how we want to live
together. After all, the role of government which includes revenue raising and spending is to
reflect, through public policy, agreed-upon principles of its citizens. The CCSD suggests that the
changes to come be guided by the following basic principles, which go beyond mere efficiency and
cost-saving goals:
- the reduction of economic inequities between individuals and regions;
- equal access to opportunities, so that a person's future is not limited by their social and economic
environments;
- means for self-support and the ability to influence decisions that affect one's life;
- collective support for those who are unable to support themselves;
- shared responsibility for our collective well-being. It is in everyone's interest that all Canadians be
included in our social and economic fabric; and,
- a system that maintains income security and stability, one that does not require individuals to "hit
bottom" before intervening. In other words, a system that prevents poverty, rather than simply
responds to it.
The process of deficit reduction and the structural reforms of government must be guided by a vision
of where we want to be in the future. Our current economic and social deficit requires more than
simply cutting expenditures. It requires a hard look at all options, and a realistic consideration of how
we can most equitably distribute the burdens and the responsibilities of debt and deficit reduction and
of helping Canadians adapt to the changing economy. A fair and balanced approach is necessary if
we are to maintain our traditional values while meeting the challenges we face.
A Balanced Approach
The CCSD is calling on the government to stick to its pledge in the Red Book that promised a
"balanced approach," an approach that was reiterated in the Department of Finance paper, Creating
a Healthy Fiscal Climate, but recently ignored in the February budget. Disappointingly, no serious
options for generating revenue were presented in the budget; instead, a lopsided ratio of seven
dollars in cuts for every dollar in revenue raised was implemented. Furthermore, little attention aside
from purely symbolic measures was given to equity, or the distribution of the burden of debt and
deficit reduction. A truly "balanced approach" is one that looks at both revenues and expenditures,
considers the economic and the social implications of measures, and recognizes the impact of these
changes, as well as the expected impact in the future.
The CCSD has proposed an approach that recognizes the debt and deficit problem, while addressing
the need to look beyond the immediate bottom line. The Council is fully aware of the debt problem
and supports deficit reduction; it is simply the approach presented by the government with which we
disagree. Reasonable alternatives to major spending cuts exist. What is needed is a fair and realistic
assessment of possible revenue measures and a more modest program of fiscal belt-tightening. By
earmarking the funds generated by increased revenues, we can reduce and eventually eliminate the
deficit, and then begin to tackle the debt without dismantling the social infrastructure of the country.
II. PUBLIC SPENDING
In many circles, government spending and more specifically, social programs, have been popular
scapegoats for the deficit. Yet even before the cuts announced in this last budget, total federal
program spending, at 16% of GDP in 1994-95, was actually lower than it was during the 1970s. With
the major reductions announced in February, including $4.5 billion taken from transfers to provincial
social programs, public spending will fall further, to just 13% of GDP by 1996-97. This is a level
below that of the immediate post-war period. Government spending is clearly not out of control. Yet,
even at 13% of GDP, there are calls for deeper cuts, as if we can continue to cut indefinitely.
We take for granted the independent rankings of the world's most livable countries that consistently
rank Canada at or near the top of the list. This could not have come about without substantial
investments in our social infrastructure. But with public spending soon to fall to levels of the 1950s,
and considerably below the OECD average, Canadians must recognize that our current standard of
living and the quality of life in this country will eventually fall as we reduce investments in our
children, schools, family and social services, public health, and other pillars of our social
infrastructure. Just as insufficient investment in our physical infrastructures may mean crumbling
roads and bridges, falling investments in our nation's social infrastructure will inevitably lead to a
weakened social fabric that will be evident in higher crime rates, lower levels of education, higher
unemployment, disenfranchised and troubled youth, substance abuse, family income insecurity, and
high levels of poverty.
Social investment does not mean overspending. In fact, when we separate the cost of financing the
debt from current spending and revenues, it becomes clear that the federal government is already
maintaining a responsible match between what it collects and what it spends. In recent years, the
federal government has, in fact, managed four surplus operating budgets between 1988 and 1991, and
is continuing to do so again now that the economy is recovering. And despite estimates for the
coming fiscal years that show operating surpluses almost $30 billion by 1996 97 growing interest
charges on the debt will continue to cause annual deficits, even though more than $25 billion in
spending cuts are planned by 1997-98. As the Liberals said in their Red Book, "to achieve this target
(a 3% of GDP deficit), cutting expenditures alone, as the Conservatives are proposing, will not be
sufficient." The CCSD agrees. With government spending now at its lowest levels in 45 years, and
growing operating surpluses, our focus for deficit reduction must move beyond this one-sided
approach. It should now be clear that the deficit cannot be eliminated simply by cutting spending. If
the government is truly serious about eliminating the deficit and doing so without completely
dismantling the federal government in the process alternatives must be considered.
III. THE TAX SYSTEM
The so-called "grassroots" campaign against income tax hikes prior to the budget proved successful.
In large numbers, Canadian taxpayers told the federal government that income taxes are already high
enough, therefore the only alternative it was argued was to cut spending. Canadian taxpayers feel
they are already paying enough taxes for good reason: Canada relies more on personal income taxes
than any other G7 country, and the proportion of revenue raised from this source has increased
steadily since 1965.
Yet in terms of overall tax burden, Canada is not a high-tax country in comparison with other
industrialized nations. Figure 1 shows that among 10 countries, including the other G-7 nations,
Canada's level of total taxation as a share of GDP ranks it in seventh place. At 37%, Canada's taxes
are below the average of 39% for all 24 OECD countries in 1992. Canada's heavy reliance on
personal income taxes, however, stands out. Figures 2 and 3 show the relative tax compositions of
countries in the G7. Figure 2 demonstrates that Canada even outpaces Sweden in terms of personal
income taxes, a country typically given as an example of one that leans too heavily on this form of
revenue. In Canada, the proportion of revenue raised through income taxes has, in fact, almost
doubled since 1965 to 40%, in comparison to corporate income taxes which have fallen from 15%
of the total raised to just 5% over the same period (see Figure 4). Perhaps it is because of this great
reliance on personal income taxes in Canada, and their high visibility, that many Canadians jumped
on the "no new taxes" bandwagon. The fact that most Canadians are already paying their fair share
in personal income taxes, however, should not preclude a serious examination of the tax system to
uncover alternative sources of revenue.
While the high visibility of personal income taxes makes them politically unpopular, they continue
to be the most progressive form of taxation in Canada, in that the proportion of income taxes paid
rises with income. The use of flat taxes, i.e., those that do not take income into consideration like
sales taxes or user fees, diminishes the overall progressivity of our tax system. As a result of these
regressive forms of taxation, a recent study has found that Canada's overall tax system is actually flat:
rich, poor and middle-income Canadians all pay between 30 and 34 per cent of their gross income in
one form of taxation or another (see Figure 5). This should be of particular concern in light of the
growing trend towards user fees by all levels of government. Influenced by the "no new taxes"
movement, the February budget introduced over a half billion dollars in user fees (presumably not
really taxes) in lieu of personal income tax hikes, thereby further reducing the overall progressivity
of the tax system.
Recognising the need to maintain an adequate level of investment in our social infrastructure, and the
limitations for higher income taxes and the regressivity of user fees and sales taxes, attention must
now turn to an alternative area of public spending. The CCSD strongly urges the federal government
to heed the advice of the Auditor General: we must seriously address the issue tax expenditures -
what the Auditor General referred to as "unlimited spending" and implement a system to track,
monitor, and evaluate revenues forgone by the federal government.
lV. TAX EXPENDITURES AND ALTERNATIVE REVENUES
Almost all economic and social policy analysts today are in agreement on one thing: whether
governments spend money directly through programs or through the tax system, it all constitutes
government spending, because it all represents a cost to the treasury. Some $90 billion worth of tax
expenditures are listed in the 1994 Personal and Corporate Income Tax Expenditures report published
by the Department of Finance. This figure is more than twice the $40 billion spent on social
programs, and is three-quarters of the $120 billion spent on all direct federal programs. With numbers
like these, even if the government chooses to focus only on spending, it should at least examine all
forms of government expenditures program spending and expenditures through the tax system.
RRSP and RPP Expenditures
For many years, the Council has been a strong supporter of tax-assisted retirement support through
RRSPs and RPPs. However, we do not feel that public monies should be used to provide private
pensions that far exceed average earnings. The present ceiling of $13,500 per person for RRSP
contributions provides unreasonable levels of retirement pensions. The budget merely put off raising
the RRSP limit to $15,500 limit, until 1998, after which time it will be indexed to average earnings.
This generous indexing formula is available to few other government program expenditures, certainly
not to child benefits, the refundable sales tax credit, or social assistance.
The problem with the high RRSP contributory ceiling is that all taxpayers low, middle and high
income are subsidizing generous private pensions for above-average income Canadians, through
higher taxes and deficits. Figure 6 shows who benefits the most from the RRSP program and it is
overwhelmingly high-income Canadians. The RRSP program redistributes tax expenditures in the
"wrong" direction. There is clearly a direct relationship between income and the extent to which
individuals benefit from RRSPs. In essence, the higher one's income, the more likely they are to invest
in RRSPs, and the greater is their tax benefit and the cost to the government.
Unfortunately, it is risky in today's atmosphere of restraint and with an aging population, to raise the
issue of the RRSP tax expenditures. It seems to cause a knee-jerk reaction. Without much reflection,
opponents of any RRSP changes assume that talk of RRSP reform means taxing RRSPs, or even
doing away with them. Their response is, "How are people going to finance their retirement if RRSPs
are not available?" The CCSD is not proposing taxing nor doing away with RRSPs, but is instead
suggesting some modifications that will make the system fairer for all wage earners, and stop the
subsidization of unreasonably high pensions.
The CCSD recommends reducing the annual RRSP contribution ceiling to $7,500 per person, or
$15,000 per couple (see Figure 7). The Department of Finance has estimated that an $8,000 ceiling
on both RRSPs and RPPs would save one billion dollars in the first year . The savings would accelerate each year as the
total size of the RRSP/RPP "fund" is reduced, hence lessening the tax expenditure (or cost to the government)
on these sheltered investments.
Partial Inclusion of Capital Gains
Until 1990, only two-thirds of capital gains income was included for taxation purposes. In 1990, this
was increased to 75%. This still means, however, that 25% of all capital gains go untaxed. By the
government's own estimates, the cost to the public treasury for this tax expenditure was over a billion
dollars in 1991. The CCSD urges the government to recognize that "a buck is a buck" and that capital
gains should be taxed, as are other forms of income. (Even the U.S. recently moved to full inclusion
of capital gains income for tax purposes.)
Dividend Tax Credit
Dividends received by the shareholders of Canadian corporations are subject to a special tax break,
amounting to one-third off the normal tax. In 1991, this cost the government $700 million in foregone
revenues. The CCSD understands the rationale behind this practice, which is to avoid double taxation
of corporate income: since dividends are paid out of after-tax corporate income, they have already
been taxed. However, figures produced for the Ontario Fair Tax Commission show that annually,
about -one-third of profitable corporations - those most likely to be paying dividends - did not pay
any corporate tax. Consequently, dividends passed on to shareholders have not yet been taxed and
should therefore be taxed at regular rates. The savings from this change alone could reach $230
million - one third of the amount of taxes foregone to support the Dividend Tax Credit.
Meals and Entertainment Expense
The 50% write-off for all entertainment and meal expenses by individuals and corporations accounts
for almost a half billion dollars in lost tax revenues. Typical expenses in this category include season's
tickets to sports stadiums, golf excursions, and lunch or dinner tabs, among others. At a time of
massive public servant layoffs, and deep cuts in social and general government spending, subsidization
of such a perk cannot be justified.
Accountability
To permit proper scrutiny of these tax expenditures, by both the public and government committees,
the government should produce an annual tax expenditure account as part of its public accounts. As
well, a system for evaluating various tax expenditures should be put in place to determine the degree
to which policy objectives are being achieved by these forgone revenues, as the Auditor General has
been suggesting for since the mid-1980s. The government has made very little progress on this front,
despite pre-budget assurances of fairness. Tax deferrals, credits, and deductions cost the taxpayer tens
of billions of dollars each year. If the government is serious about eliminating the deficit and ensuring
fairness in the tax system, it cannot afford to ignore the issue of tax expenditures any longer.
Inheritance Tax
Although not a tax expenditure, an inheritance tax represents an alternative source of revenue that
deserves serious consideration. Having dropped the tax in 1972, Canada is now one of only three
OECD countries without an inheritance tax on wealth. Research by Royal Trust estimates there will
be a transfer of $1 trillion dollars between generations over the next 15 years. Even with a 5% tax
rate on inheritances, roughly $50 billion over 15 years, or $3.3 billion annually, could be raised to
reduce the deficit.
Savings achieved through proposed tax changes governing RPPs, RRSPs, capital gains, and dividend
tax credits, combined with new revenue from a 5% tax on inheritances, would produce about $6
billion in the first year, and this would grow over time. This figure represents only the savings made
possible by changes specifically identified in this paper. Keeping in mind that total tax expenditures
in Canada amount to almost $90 billion, there is obviously room for additional measures. As well,
these savings represent only those accruing to the federal treasury, but in most cases, changes in tax
expenditures would also contribute significantly to provincial treasuries. The money saved by these
actions - along with other revenue-generating measures and savings not specifically mentioned -
would allow the federal government to meet its deficit targets without having to resort to severe and
damaging cuts to our social safety net.
V. SOCIAL POLICY
Despite the opportunity to seek alternative sources of revenue and savings, and to adapt to the
machinery of the federal government to changes in the economy without sacrificing traditional
Canadian values, the budget instead laid the groundwork for a radically different country. The deep
spending cuts, decentralization and downloading of federal responsibilities, privatization, and massive
public service layoffs announced in the budget, will leave Canadians with a very different country.
Perhaps the most profound change introduced in the budget, though not generally recognized as such,
was the announcement of a new block fund transfer to the provinces, the Canada Health and Social
Transfer (CHST). The CHST will replace both the Canada Assistance Plan (CAP) which covers
social assistance and social services, and Established Programs Financing (EPF), the transfer
arrangement covering health and post-secondary education. This new consolidated block fund
arrangement will greatly diminish the federal government's ability to ensure that basic national
priorities are met, as reflected in national standards, and will leave Canada with a fragmented and
weakened social safety net.
Dollars Cut = Services Lost
Along with the announcement of the CHST, the budget also reduced the combined spending currently
transferred to the provinces under EPF and CAP from $29.5 billion to $25 billion by 1997-98. The
cuts will start with $2.5 billion in 1996-97, and another $2 billion the following year, but the
cumulative impact will be $7 billion over the two fiscal years . These cuts will have an enormous
impact on communities across Canada for they compound several years of provincial cutbacks,
downsizing, and re-organization. Just as the federal government has been struggling with its own
deficit woes, provinces and municipalities have been doing the same. This most recent cut in transfers
- "deficit downloading" in effect - will result in an even greater impact on local services and programs.
Canadians will feel the effects at all levels, from hospital services and education, to local municipal
and community services.
The Loss of Fiscal Levers
For social assistance and social services, and for health, the federal government currently has the
authority to withhold transfer monies from provincial governments if they veer too widely from
established national standards. This "fiscal stick," although derived from different means for social
assistance and services than for health, is based on a simple factor - cash. Without the transfer of cash
to the provinces, the federal government has no leverage to enforce national standards. This was
already a problem for health and post-secondary education which, under EPF, are headed for a
cashless transfer formula within a decade. The fact that CAP is now being brought under this same
diminishing cash transfer formula (i.e., replacing cash with tax points), will have serious consequences
for social assistance and services, just as it has for health and post-secondary education. Canadians
must recognize that once the Canadian Health and Social Transfer tax points replace cash transfers,
national standards will no longer be enforceable. Even Prime Minister Chretien admitted that "when
you transfer tax points, you lose all leverage...because you don't collect the money, they (the
provinces) collect the money."
Traditionally, CAP has had an additional feature that has been vital in the development and support
of Canada's social infrastructure. The impetus provided by "50 cent dollars" (i.e., federal matching
of provincial dollars under CAP) has fostered the development of many programs and services that
support and invest in our communities, including services for child protection, mental rehabilitation,
family counselling, rape crisis centres, shelters for women, and subsidized daycare for low-income
families. Even if the federal government was somehow able to continue to ensure provincial
compliance to national standards through some form of fiscal penalty, the loss of this shared cost
incentive would still mean that the "fiscal carrot" to maintain these programs and services would be
lost. The matching of provincial dollars also provides an additional advantage: it ensures, almost
automatically, that the monies are spent in the areas for which they were intended. The CHST
arrangement provides no such assurance.
Priorities Follow Political Clout
The major problem with consolidation under the CHST concerns accountability. If the federal
government were to transfer a sum of money, say $25 billion in 1997-98 for example, to the
provinces to pay for three different policy areas, there would be no way of ensuring that the funds
were adequately distributed among health, post-secondary education, and social assistance and
services. And with competition for a diminishing pool of funds intensifying, social assistance and
services may well be at a disadvantage. The considerably more powerful upper - and middle - class
voices arguing against cutbacks to health and post-secondary education would, no doubt, have more
influence than the more fragmented and often vulnerable population that relies on social assistance
and services - 40% of whom are children.
Unfortunately, we often overlook the links between developing and sustaining healthy families and
communities, both mentally and physically, and overall public health. The over-emphasis on doctors,
hospitals, and medicine - or curative measures - has made longer term, or preventative investment
in children, families, and communities less of a political priority. When making tough budgetary
choices, provincial government priorities for social spending will favour health and post-secondary
education (and training). Social services and social assistance are certain to take the deepest cuts,
sparing health care but only for the time being.
Matching Priorities with Leverage
If Canadians want to continue to express their national social priorities, the federal government must
play a role in the development of social policies. In response to the current public demands, the
federal government has set out what it sees as national priorities. On the federal agenda, for example,
is the government's commitment to eliminate child poverty by the year 2000. By which mechanisms
does the federal government intend to formulate, implement and enforce public policies to address
this and other important national social priorities? If the federal government truly has a strong interest
in pursuing social policy goals, it must provide adequate levels of funding and maintain a funding
mechanism that will provide effective leverage to influence social policy. Without these basic pre-
conditions, stated goals, objectives and national standards will be ineffective and unenforceable.
The National Role
Collectively the combination of fewer dollars, the loss of federal levers to ensure national standards,
and the loss of accountability for where transferred dollars are being spent, will result in a radically
different vision of Canadian social policy. Why should Canadians be concerned about losing the
national dimension in social policy?
The role of the federal government in ensuring equitable levels of services and programs across
Canada through the establishment and enforcement of national standards has been, and continues to
be, a primary reason for federal involvement in social policy. The basic assurances provided by our
national system of Medicare, for example, and the social safety net of last resort that exists for all that
need it, contribute to our national identity. National unity and social cohesion in Canada have been
supported by this national social vision and our sense of collective responsibility that is exemplified
by Canada's social framework. The cost of losing this vision, and the collective values that underlie
it, would far exceed any "savings" from cuts to our social security system. The real cost would be a
diminished sense of nationhood and social responsibility over time; we would no longer belong to
a nation in which our collective interests extend beyond the borders of each province or region.
A Negotiated Minimum
Although the CCSD is not supportive of the CHST option, the decision has been made: CAP and
EPF have been consolidated. Recognizing this, the focus must now be on what can be done to
minimize the pitfalls of this arrangement. There are two basic elements: cash and standards. There
must be some form of cash transfer from the federal government to all provinces - equalization
payments are not sufficient - and they must be accompanied by accepted national standards. Cash
transfers and standards must work in tandem - the exclusion of the one is as ineffective as having
neither. The example of post-secondary education demonstrates this point. Even though part of the
transfer for post-secondary education is in cash, the fact that there are no standards means that the
provinces can do as they wish with the funds. As a result, the federal government has had virtually
no influence in this field, and is unable to establish such priorities as the portability of post-secondary
credentials from one province to another.
Establishing national standards without cash transfers is of equal concern. As was mentioned, once
tax points replace cash transfers under the CHST, there will be no way, for the federal government
to set national priorities because the standards will be largely unenforceable. Only by combining cash
transfers with accepted standards, will the parameters of activity in these three fields of social policy
be clearly established, and participation and agreed-upon priorities will be safeguarded. The CCSD
suggests that the following minimum national standards and principles form the foundation of the
CHST: for health - universality, portability, comprehensiveness, public administration, and
accessibility; for social assistance - financial assistance to anyone in need, no residency requirement,
and access to appeal; and for post-secondary education - accessibility, portability, and public
administration.
No National Debate
The introduction of the CHST amounts to an unprecedented transfer of financial and administrative
authority from Ottawa to the provinces. Through the budget, the federal government has all but
vacated the field of social policy, without giving the matter the attention it should have received
through the traditional legislative process or a full-scale constitutional debate. As a result, there has
been no real public debate on this issue. Despite having the opportunity for public debate and input
at countless government sponsored community meetings during the Social Security Review process,
the government did not reveal its intentions to move ahead with the CHST. Why was such a major
social policy initiative perhaps the largest single social reform in decades not included on the social
reform agenda? Canadians demonstrated their willingness to participate in social reform during these
hearings, but they were denied the opportunity to speak to this critical issue. This process of reform,
which will shape the future of Canada's social safety net, should have been open to public debate.
VI. CONCLUSION
The CCSD is well aware of the pressures facing the federal government as it attempts to adapt to
national and global changes, and to tackle the deficit and accumulated debt. We do not deny that
some "re-thinking" of government must take place. The federal government does not need to be
involved in all aspects of the economy, and perhaps some areas of public policy are best left to the
provinces and local governments. But this does not mean that we have to abandon our traditional
Canadian values or dismantle the structures that contribute to the unity and national vision of this
country. Nor does this justify the government's tight monetary policy at the expense of jobs and
ordinary Canadians seeking mortgages and personal loans, or deep spending cuts that effect vital
public investments in children, families and communities. Versions of this approach by previous
governments were rejected after a decade of ineffective experimentation. There are alternatives to
deep spending cuts. The entire federal system does not need to be replaced in order to deal with the
deficit and adapt to changes in the economy. Canadians need to have more creative alternatives. The
simple "cuts vs. personal income taxes" debate has left the public feeling as though little else can be
done. There is, in fact, plenty that can be done to improve our current system without completely
reinventing it. The CCSD has given several suggestions in this paper about how to raise new revenues
and reduce tax expenditures. Along with efforts to improve the functioning and efficiency of the
federal government, and a refocusing on employment and investment in people and communities, the
deficit problem can be managed in a fair and balanced manner.
Over the course of several generations, Canadians have developed a social security system and a
standard of living that is unrivalled, but we must not forget that our quality of life is directly related
to our investments in people, schools, communities, and public services. These investments have been
possible through our system of federal/provincial arrangements, by providing incentives and the
means to support a network of social, education, and health services across the country, and a social
safety net that provides support to all in need. It is imperative that a national framework, supported
by national standards and federal/provincial transfers, continue to contribute to the quality of life in
Canada, and that social cohesion and a national vision continue to be supported by the policies of the
federal government.
REFERENCES
Department of Finance. A New Framework for Economic Policy. Ottawa: Government of Canada,
October, 1994.
_____. Budget Plan. Ottawa: Government of Canada, February, 1995.
_____. Creating a Healthy Fiscal Climate. Ottawa: Government of Canada, October, 1994.
_____. Economic and Fiscal Reference Tables. Ottawa: Government of Canada, September, 1994.
______.Federal Spending. Ottawa: Government of Canada, January, 1994.
______.Government Revenues in Canada. Ottawa: Government of Canada, January, 1994.
______.Income Tax Reform. Ottawa: Government of Canada, June 18, 1987.
______.Personal and Corporate Income Tax Expenditures. Ottawa: Government of Canada,
December, 1994.
Gillespie, I. and Vermaeten, W. "Tax Incidence in Canada" in Canadian Tax Journal,
Vol. 42, No.2, 1994.
Liberal Party of Canada. Creating Opportunity (the "Red Book"). Ottawa: Liberal Party of Canada,
1993.
Organization for Economic Co-operation and Development. "New Orientations for Social Policy"
in Social Policy Studies, No. 12. Paris: OECD, 1994.
_______. Revenue Statistics of OECD Member Countries: 1965-1993. Paris: OECD, 1994.
Ross, David; Shillington, Richard; and Lochhead, Clarence. The Canadian Fact Book on Poverty
1994. Ottawa: Canadian Council on Social Development, 1994.
Canadian Council on Social Development,
190 O'Connor Street, Suite 100,
Ottawa, Ontario, K2P 2R3
Tel: (613) 236-8977, Fax: (613) 236-2750, Web: www.ccsd.ca, Email: council@ccsd.ca
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