1992 Canadian federal budget

• Reduction in the personal surtax rate: the general personal surtax rate is lowered by 1 percentage point (to 4%) on 1 July 1992 and another (to 3%) on 1 January 1993.[pap 1]
• Introduction of the Home buyers' plan (HBP): 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.[pap 2]
• Creation of the Child Tax Benefit (CTB): starting January 1993 the CTB replaced family allowances, the child credit and the refundable child credit. The initial CTB amount is set at $1,020 with a Working Income Supplement of up to $500 for low-income working families.[pap 3]
• Increase of the child care expense deduction: the maximum deduction is increased by $1,000 ;[pap 4]
• The increase in the RRSP and RPP limits is delayed by a year.[pap 5]

The budget reduces taxes imposed on corporations by $2 billions over the 1992-93 to 1996-97 period. The budget specifically provides relief to the manufacturing and processing industries that have been seriously affected by the recession.[2]

• Reduction in the manufacturing and processing tax rate: phased-in two steps, 22% on 1 January 1993 (down from 23%) and 21% on 1 January 1994 ;[pap 6]
• Faster depreciation for selected equipment: the CCA deduction rate for eligible manufacturing and processing machinery and equipment is increased from 25 to 30%.[pap 7]

• The withholding tax on direct dividends is reduced to 5% from 25%.[pap 8][2]

The Expenditure Control Plan announced in the 1990 budget and extended in 1991 is continued and broadened in the 1992 budget.[pap 9]

• The Prime Minister and all cabinet ministers took a 5% pay cut on 1 April 1992 ;
• 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.

• 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.

The Liberal leader of the Official Opposition in Ottawa Jean Chrétien, and the NDP leader Audrey McLaughlin, criticized the budget for its lack of measures to fight unemployment. The Bloc québécois leader Lucien Bouchard pointed out the budget was a proof that the federal government was at the end of its rope.[3]

The budget was well received by the business community and especially real-estate and construction actors.[4] The value of the Canadian dollar increased by 0.39 cents with respect to the United States dollar in the foreign exchange market the day after the budget speech. The TSX 300 index gained 35.52 points while the Montreal Stock Exchange index gained 19.39 points.[5]

Quebec's labour unions (CSN, CEQ and FTQ) were disappointed by the budget pointing out the lack of measures to fight unemployment and poverty and the lack of new infrastructure projects. The unions also criticized the abolition of the Economic Council of Canada.[4]

Quebec's finance minister, Gérard D. Levesque, received the budget favourably talking about a step in the right direction in that it did not reduce transfers to provinces.[6]

The PQ, the Official Opposition in Quebec, on the other hand decried the budget as cosmetic and not going far enough to fight unemployment although some tax relief measures (and especially the reduction in the personal surtax) were applauded.[6]

Ontario's NDP Finance minister Floyd Laughren also criticized the lack of measures to fight unemployment.[3]