March 20, 1956

PRINCIPAL SOURCES OF TAX REVENUES


1949 50 51 52 53 54 55 56* [DOT]estimateo


CUSTOMS DUTIES


1949 50 51 52 53 54 55 56* The Budget-Appendix Succession duties Revenue from succession duties is estimated at $75 million in 1955-56 an increase of $30 million, or 67 per cent over the previous year. Two-thirds of the increase came from payments in respect of one unusually large estate. Other taxes The principal source of revenue under this heading is the tax on the premium income of insurance companies which will produce approximately $15 million in 1955-56 compared with $14 million in the previous year. Small amounts of revenue are also received from special taxes on the export of electrical energy from Canada and the tax on the export of furs from the Northwest Territories. (2) Non-Tax Revenues Non-tax revenues for 1955-56 are estimated at $392 million, an increase of $42 million over the total of $350 million for the previous fiscal year. It is to be noted that the classification "special receipts and credits" has been eliminated and items which in previous years were shown under this heading have been reclassified and appear under the appropriate heading in the nontax revenue category. The following table presents a comparative summary of non-tax revenues for the current and the previous year. TABLE IV (In millions of dollars) Non-Tax Revenues Fiscal Year Ended March 31 Increase or Decrease (-) 1956 (Estimated) 1955 Amount Per cent136-8 131-3 5-5 4-2147-0 134-0 13-0 9-71-6 1-6 2-8 1-8 1-0 55-616-1 14-1 2-0 14-222-4 31-6 -9-2 -29-117-3 18-0 -0-7 -3-945-4 14-6 30-8 211-030 4-6 -1-6 34-8 392-4 350-0 42-4 12-1 Post Office Gross post office receipts for 1955-56 are estimated at $157 million. After making authorized disbursements from revenue of $20 million for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., net post office receipts credited to budgetary revenues are estimated at $137 million. Gross receipts for 1955-56 are expected to exceed those of the previous year by $6 million. As estimated payments from revenue are the same as the payments in 1954-55, the net increase in post office receipts credited to budgetary revenues is $6 million. As costs of operating the Post Office during 1955-56 (excluding the $20 million charged to revenue) are expected to total $127 million, net revenue will exceed net costs by $10 million. However, in making this comparison it is to be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government



The Budget-Appendix departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments. Return on investments Return on investments is expected to yield $147 million, an increase of $13 million over the total of $134 million received in the previous year. Payments from Crown corporations are estimated at $83 million. This is $5 million more than the total received during the previous year and is due mainly to increases of $8 million in receipts from the Canadian National Railways, $2 million from Central Mortgage and Housing Corporation and $2 million from Polymer Corporation Limited offset in part by decreases of $3 million in profits received from the Bank of Canada and $4 million in the surplus earnings of Canadian Arsenals Limited. The increase of $8 million in the amount expected to be received from the Canadian National Railways reflects a dividend of $11 million paid on the 4 per cent preferred stock of the company held by the government offset in part by a decrease of $3 million in interest on loans. Receipts from other loans and investments are estimated at $64 million an increase of $8 million over the previous year due mainly to increases of $5 million in the earnings of the securities investment account and $4 million on sinking funds and other investments held for the retirement of unmatured debt. A comparative summary of the estimated receipts for 1955-56 and the amounts received in the previous year is given in the following table.


TABLE V


(In millions o( dollars) Return on Investments Fiscal Year Ended March 31 Increase1956 (Estimated) 1955 Decrease (-)Loans to, and investments in, Crown corporations- 38-3 41-5 -3-22-2 6-2 -4-011-9 41 7-818-5 16-2 2-340 4-3 -0-350 3-3 1-72-9 2-5 0-483-8 78-1 4-7Other loans and investments- 22-5 22-8 -0-3110 12-0 -1-010 10 Soldiers and general land settlement loans and Veterans 4-9 4-9 10-8 10-9 -0-15-2 0-2 5-0Sinking fund and other investments held for retirement 6-3 2-7 3-62-5 1-4 1-164-8 56-9 8-3147-0 134-0 13-0 Premium, discount and exchange Premium, discount and exchange transactions in the current fiscal year are expected to result in a net credit of $2 million to revenues compared with a net charge of $4 million to expenditures in the previous fiscal year.MARCH 20. 1956 The Budget-Appendix Bullion and coinage Revenue under this heading arises out of the operations of the Royal Canadian Mint and includes assaying, refining and handling charges and the net gain on coinage and refining operations. The estimated amount credited to bullion and coinage revenue for 1955-56 is S3 million, an increase of SI million over the previous year. Privileges, licences and permits It is estimated that revenues of $16 million will be received during the fiscal year on account of privileges, licences and permits compared with $14 million received during 1954-55. Approximately $7 million of this total is collected by the Department of Transport, mainly on account of aircraft landing fees, rentals of hangar accommodation, office, shop and garage space and living quarters and land and water power rentals. Proceeds from sales An amount of $22 million is expected to be received during the current fiscal year as proceeds from sales, a decrease of $9 million from the total received in 1954-55. This amount includes $7 million from Crown Assets Disposal Corporation representing amounts realized from the disposal of surplus Crown assets (after deducting certain agency fees and transfers), $6 million under agreements of sale, and $5 million from Central Mortgage and Housing Corporation representing the proceeds from the sale of wartime housing properties, including depreciation provisions set aside by the Corporation in previous years on properties that have now been sold. Services and service fees It is estimated that $17 million will have been received during the fiscal year for services and service fees by the various departments of the government, a decrease of $1 million from the previous year. Approximately 75 per cent of these fees are collected by three departments-$6 million by Department of Trade and Commerce mainly for services for the inspection, weighing, storage and elevation of grain and for electricity, gas and weights and measures inspection service; $5 million by the Royal Canadian Mounted Police mainly for police services to provinces and municipalities; and $3 million by the Department of Transport chiefly for wharfage and other canal and marine service fees, steamship inspection service, air-ground radio service at airports, and government telegraph and telephone service. Refunds of previous years' expenditure Revenues in this category consist of amounts received during the current fiscal year representing refunds of expenditures in previous years. The estimated amount of $45 million received during 1955-56 compares with a total of $14 million received during the previous year. The increase of $31 million is due almost entirely to a repayment of $30 million received from the Government of the United States of advances by Canada on contracts for the supply of aircraft, engines and equipment. The arrangement is that when Canada places contracts with the Government of the United States, payments of the estimated costs are made to the United States treasury. If these estimated costs are revised or if there are reductions in the contracts the Government of the United States makes refunds of the overpayments. Miscellaneous Miscellaneous revenue is expected to amount to $3 million for the year 1955-56 compared with $5 million in the previous fiscal year. The decrease is due mainly to the fact that there is no comparable amount in the current year



The Budget-Appendix to the $1 million, representing abnormal royalties and licence fees due to war production disallowed to owners and licensers of patents, which was transferred from a suspense account to revenue in the previous year. (3) COMPAHISON OF ACTUAL REVENUE WITH BUDGET FORECAST Total budgetary revenues for 1955-56, excluding revenues from the old age security taxes, as now estimated are expected to be $183 million, or about 4 per cent more than the forecast made in the budget speech of April 5, 1955. It is expected that when the books for the year are closed revenue from all sources except the tax on corporation profits and miscellaneous taxes will have exceeded expectations. This excess of revenues over the amounts forecast reflects the fact that the general level of economic activity and production throughout the year has been considerably above the level which formed the basis for the budget forecast. The following table shows the extent to which actual revenues for 1955-56, as now estimated, differ from the budget forecast.


TABLE VI


Comparison of Budget Forecast with Actual Revenues for Fiscal Year Ended March 31. 1956 (In millions of dollars) Source of Revenues Budget Forecast of Revenues Actual Revenues (Estimated) Increase or Decrease (-) compared with Budget Forecast1,150-0 1,180-0 67-0 30-065-0 2-01,057-0 45-0 1,035-0 75-0 -22-030-0410-0 475-0 65-0238 0 245-0 7-0599-0 640-0 41-0231-0 260-0 29-017-0 16-0 -1-0 3,812-0 390-0 3,993-0 392-4 181-0 2-4 4,202-0 4,385-4 183-4 The estimated revenue from the personal income tax is $30 million, or 3 per cent, above the budget forecast. This is because the total of personal incomes for the year reached a level above what was anticipated a year ago. The revenue from corporation income tax as now estimated is $22 million less than forecast despite the fact that corporate profits in 1955 exceeded expectations. This contradictory result is due to the fact that corporations are entitled under the Income Tax Act to base their monthly tax remittances for the first nine months of a payment period upon either their actual profits in the preceding year or the estimated profits of the current year and the option had a somewhat greater effect than anticipated. The Budget-Appendix The extent to which the estimated revenue from customs import duties has exceeded expectations is a reflection of the upsurge in imports which accompanied the rapid rise in production and economic activity. The estimated revenue from both sales and other excise taxes is well ahead of expectations as the level of consumption rose to new highs. The extent to which new car sales has exceeded expectations is one of the main reasons why revenue from other excise taxes passed the budget forecast. B. EXPENDITURES Budgetary expenditures for 1955-56 are estimated at $4,437 million, an increase of $162 million over the 1954-55 total of $4,275 million.


MILLIONS OF DOLLARS 21001


I too 1200


PRINCIPAL CLASSES OF BUDGETARY EXPENDITURES


_________________FISCAL YEARS ENDED MARCH 31 MILLIONS OF DOLLARS 1049 50 51 52 53 54 55 5«* [DOT]00


VETERANS AFFAIRS


1949 50 51 52 53 [DOT]estimated


PUBLIC DEBT CHARGES


I * I I I Lilli 1111 300 50 SI AS S3 54 55 55* HEALTH .WELFARE & SOCIAL SECURITY 1*200



|Ti iiinni 600 1049 50 51 52 53 54 55 55* SUBSIDIES & TAX RENTAL PAYMENTS TO PROVINCES 1940 50 51 52 53 54 55 55* Note: The lightly shaded area in the chart for Health, Welfare and Social Security represents pension payments out of the old age security fund. 2404



The Budget-Appendix A comparative summary of estimated expenditures by departments and principal purposes for the fiscal year 1955-56 and actual expenditures for the preceding year is given in the following table:


March 20, 1956