2015 Federal Budget: A Balance in Hand is Worth Two in the Bush

This report is provided by TD Economics.
reprinted with permission


• Oil prices have dominated the headlines throughout the 2015 budget season. And with national
income growth expected to be soft in the near term, the coffers of federal government were not able
to escape without a few scratches.

• Despite this setback, the federal government appears poised to balance the budget in each year of
the projection, partly through a combination of one-time revenue raising measures, a lower set-aside
for contingencies, and ongoing spending restraint. That said, the Feds also found room to provide
some extra goodies in the form of tax cuts and new spending.

• Looking to revenues, some of the eye-catching tax breaks introduced in Budget 2015 are the increase
of the TFSA contribution limit to $10,000 annually, a reduction in the minimum withdrawal rate for
Registered Retirement Income Funds, and a reduction in the small business tax rate to 9%.

• The outlook for expenditures is more mixed, with new measures including additional spending on
veterans’ benefits and more money for defense and public safety. On the other hand, spending on
public services disability and sick leave benefits are expected to generate additional savings.

• In light of the outlook for modest surpluses, the federal debt-to-GDP ratio is projected to decline to
25.5% by the end of the 5-year projection. This would put the government on track to meet its 25%
debt-to-GDP target by 2021.

To read complete details on the budget, click here