By James Langton
(November 2 – 15:20 ET) – Finance minister Paul Martin delivered a hotly anticipated update on the country’s finances today, outlining the scale of the government’s projected surpluses over the next five years.
The surplus forecasts are as follows: $5.5 billion in 2000; $8.5 billion in 2001; $12.5 billion in 2002; $17.5 billion in 2003; and $23 billion in 2004. This is after the annual $3 billion contingency reserve provision, and financial prudence built into the forecasts of $1 billion in the first year, rising to $4 billion in the fifth.
Martin said that the Ministry intends to continue setting aside its annual $3 billion contingency reserve, building prudence into its forecasts, and explicitly lay ing out that prudence.
Martin also said that the government will shift to a five year planning horizon instead of two year horizon , noting that these forecasts should be cautious given the difficulty of making five year forecasts, although decisions will be left on a rolling two-year schedule.
Martin set out four uses for these surpluses: debt reduction, cutting taxes, investment in innovation, funding education and skills upgrades.
On the tax front,Martin says it will focus on personal income tax reduction, in particular middle- and low-income Canadians, especially those with children. He also plans to make the corporate tax system internationally competitive.
Employment insurance premium rates will decline from $2.55 to $2.40 for 2000.
The government also intends to table a multi-year plan to cut taxes further in the next budget.
On the investment front Martin says that Ottawa will continue to support research and development, to spend on childhood education and encourage life-long learning.
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