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WEDNESDAY, FEBRUARY 28, 1979
THUS THE GOVERNMENT'S FINANCIAL RESERVES AVAILABLE TO COVER CONTINGENT LIABILITIES, EMERGENCIES AND UNFORESEEABLE COMMITMENTS WILL STAND AT OVER $6,500 MILLION AS WE ENTER 1979-80.
+BUT, AS THE TRADE DEFICIT WIDENED TO OVER $9,000 MILLION IN 1978, AND A VERY REAL THREAT OF INFLATION WAS BEGINNING TO EMERGE, I WAS NOT IN A VERY HAPPY FRAME OF MIND, WHEN I CAME TO PREPARÉ THE BUDGET FOR THE COMING YEAR.
+ I DECIDED I HAD TO DEVISE WAYS AND MEANS OF BRINGING THE DEMAND FROM BOTH THE PRIVATE AND THE PUBLIC SECTORS MORE INTO LINE WITH THE ECONOMY'S OUTPUT IN ORDER TO DAMPEN DOWN THESE
INFLATIONARY PRESSURES- AND THAT I MUST TRY TO DO THIS IN SUCH A WAY AS TO REDUCE THE IMBALANCE BETWEEN IMPORTS AND EXPORTS.
+SO THE GOVERNMENT'S BUDGET PROVIDES FOR A SMALLER INCREASE IN EXPENDITURE NEXT YEAR THAN IN RECENT YEARS IN REAL TERMS THE INCREASE IS FIVE PER CENT COMPARED WITH 25 PER CENT IN 1978-79 AND 16 PER CENT IN 1977-78.
+NONETHELESS, WE SHALL BE SPENDING $12,500 MILLION IN 1979-80. NO LESS THAN ONE THIRD OF THIS WILL BE ON CAPITAL WORKS (AND, AMONG MANY OTHER THINGS, THIS VERY LARGE SUM OF MONEY WILL FINANCE THE COMPLETION OF 35,600 FLATS FOR RENTING AND SALE COMPARED WITH 14,000 THIS YEAR. A RATE OF COMPLETIONS OF ABOUT 35,000 WILL BE MAINTAINED OVER THE NEXT FEW YEARS SINCE HOUSING IS ONE OF OUR TOP PRIORITIES).
+BECAUSE THE GROWTH RATE OF GOVERNMENT EXPENDITURE IS BEING TRIMMED BACK AND REVENUE COLLECTIONS ARE EXPECTED TO GROW TO NEARLY $14,000 MILLION, I AM BUDGETTING FOR A SURPLUS - OF ABOUT $1,400 MILLION. THIS DOES NOT MEAN WE SHOULD SPEND MORE. I SAY THIS BECAUSE THE STRAINS ON THE ECONOMY, WHICH ARE NOW SO APPARENT, MUST BE EASED.
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+NOR DOES THE SURPLUS MEAN, I AM AFRAID, THAT THERE SHOULD BE A GENERAL REDUCTION IN TAXATION. I SAY THIS BECAUSE IT WOULD BE UNWISE TO RELEASE PURCHASING POWER BACK INTO THE ECONOMY, ALTHOUGH I DO NOT INTEND TO RAISE TAXES AS AN ANTI-INFLATIONARY DEVICE.
+YET I DO NOT THINK WE SHOULD SHIRK FROM AMENDING OUR TAX LAWS IF, ON EQUITY GROUNDS, DESIRABLE REFORMS SUGGEST THEMSELVES, PROVIDED THE NET EFFECT IS NOT TO REDUCE THE SURPLUS I AM BUDGETTING FOR.
+THIS AFTERNOON PROPOSED, THEREFORE, THREE REFORMS AT A TOTAL COST TO THE REVENUE IN 1979-80 OF $80 MILLION. AS REGARDS PROFITS TAX, THE SYSTEM OF DEPRECIATION ALLOWANCES FOR PLANT AND EQUIPMENT IS TO BE REFORMED AND SOME ANNUAL RATES OF DEPRECIATION
INCREASED.
+THEN, AS REGARDS PERSONAL TAXATION, THE SUPPLEMENTARY PERSONAL ALLOWANCE OF $2,500 FOR A SINGLE TAXPAYER AND $5,000 FOR A MARRIED TAXPAYER, INTRODUCED TWO YEARS AGO, WILL NOW BE CLAWED BACK MORE GRADUALLY AS THE TAXPAYER'S INCOME INCREASES.
/SO A SINGLE