It is expected that the impact of the tax reductions will be clearly reflected in the August 2000 results. Other income taxes were also up strongly, reflecting the growth in corporate profits. The remaining components of excise taxes and duties were lower. Monthly changes in this component are extremely volatile, reflecting the timing of receipts. Direct program spending was up 13.2 per cent, reflecting the impact of wage settlements as well as initiatives announced in recent budgets.
Negative numbers indicate a net requirement for funds.
However, the results to date do not include the full impact of the tax reduction measures affecting the current fiscal year , as announced in the 2000 budget as part of the Government's Five-Year Tax Reduction Plan. For example, the restoration of full indexation of the personal income tax system, the reduction in the middle tax rate from 26 per cent to 24 per cent and increases in the amounts at which the personal income tax rates apply will restrain the growth in personal income tax revenues over the balance of the fiscal year. In addition, the annual growth in both corporate income tax and GST revenues is overstated due to timing considerations. As such, the budgetary results for the first few months of 2000-01 are not an appropriate indicator of developments over the year as a whole. Over the balance of the fiscal year, growth in this component should be restrained as the tax reductions announced in the 2000 budget come into effect.