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(tl).-,,,)
S- 2. 7
(1'1. >~)
J~'
.2 -II
3 '11
.'Il
60
World War II
(1939-1945)
50
The figure shows the behaviour
since 1926 of the three major
components of government
expenditure, as well as total
current expenditure, for all
levels of government combined and measured as a percentage of GDP. Government
purchases rose most sharply
during World War II. Transfer
payments have risen as a share
of GDP, particularly during
recessions. Interest payments
as a share of GDP increased
quickly during the 19805 and
early 19905 but have since
fallen.
/'
40
30
20
10
o
1926
2006
Year
SouIt:e:Adapted 6tJm the~
data for 1926-1960 6tJm Canac6an
Economic Observer, Historical
Statistica/.5uwfernent
1994t95. Data
for 1961-2006 from Fiscal Reference
Tables, Department of Anance,
Ottawa, September 2007.
The figure shows the history of
revenues in several categories
for all levels of government
combined and measured as
a percentage of GDP. Total
revenue has risen over the past
80 years. Most of the increase
is accounted for by increases
in direct taxes.
o
1926
2006
Year
S
J
){t.s
As
e '
~ ~~.
Ke~)'teslf;'''s a~ e ~
~O""';',
~lAd,t-'h SholA lrl be pfOCSJ4,,/It'A./.
5k>IIlIJ be 611tr/.'je,f- de-hc/ff dun"l
rete ,'ot\S d- 6t11J,tf $1At;11Il ($ rJlAY,"b -.
10
A (($fAltl
0.
..,-;vc.
JA t'hl J '1«"0 cJ,
IQ?e. ex
I,
?J
o.Mk>~hCA.{7~:
Propof-hoY'\tJ\) -t-o.)(. Plfes mtt4,., #tJf ~
Y(\Jtn es rise tfJl,e" ,"(,t)mts ,,. e I fA'"
OCGf,\fS
~
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l}fa COW') eS
~
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I
2)~~ offJO.A. ~~
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101' etrAWI}lt Unem,/~"'/- z;,SH~Qnc.e
ro:-~W1t.1f' )Yl.S~ d".f ~ fcce~'Ol?s a-'lDt1!
d\lJ' ~
6~rS, S'0CIQ:1 AssfJ~ "7"'&6
beh.. rte. ~
SQ1I1e ~
~ ,
The actual and fuJl-empfoyment
budget surpluses for all levels
of government are shown as a
percentage of GDP. The acbJaI
budget surplus (the tmI rme) was
less than the full-employment
surplus (the black line) by substantial amounts during the
1981-1982 and 19~1992
recessions, reflecting the
ifI1xlr-
tanee of automatic stabtlizers.
-10
1975197719791981198319851987198919911993199519971999200120032005
Year
~ (l
~'!il'
~~
~
~
i
v
~w ~
~PJq~~·~~D1!
-
=
-H.~+ M~~ 4~ ~/
~.~ ~~€-~
- -
¥I
Ij
•
All,. 'n~Ac. 'k
I~~
T
w
The poverty trap
The figure shows the ef. fective marginal tax rate
for a single parent with
one child, in .Ontario in
1998, graphed against
family income. As eClrnings rise, eligibility for
benefits declines, so that
marginal tax rates may be
very high even at low levels of income. Labour supply is discouraged because
only skilled workers can
enter the labour force to
the right of the highest
marginal tax rates.
Source: Df!~~rtmenf of Fin,IIlce.
,-.•..
112
c::
11/
u
..
11/
g,
'-'
11/
96
..
'oj
>4
~
80
';j
~=
..
os
64
e
11/
-5
'"
48
~
'"
32
,..
16
0
0
40,000
50,000
60,000
Family income (dol1arH)
rB
v
~q~~,~
~~ er f
\).,
.~
---
World War II
The upper curve shows the
ratio of federal government net
debt to GDP, for the period
1926-2006. The lower curve
shows the ratio of debt to GDP
for provincialgovernments,for .
the period 1977-2006.
The
\
federal debt-GDP ratio was
high during the Great Depression, rose dramatically dUring
World War II, then rose again
Great
Depression
after 1976, peaking in 1996.
The provincial ratio rose
rapidly during the 19805 and
19905 but is now falling.
Sotm:e: feder.d net debt is adapted
from StdiSlics Canada. CANSlM n.
series vtStS48. Net debtof provinrial and rerritoriaIgoyemmenlS is
adapk!d &om series vtSl53S. GDP
is adapted from series v646925
(196t-2006) and from Canadian
Economic Observer, Historical
Statistical Supplement;. 1994195
(192~t960).
o
1926
2006
Year
~
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e~~eJ
f
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or
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h,. ;s
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fj~
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i
I
I
Youth and Seniors Dependency
Ratios, Canada, 1960-2040
seY\toV's
J
)
t'
')
f
80
10
•
60
How
"
youth
dependency ratio
SO
C!
<U
~
~
'0
<U
201Q
Jo Jo
10 ."
0-
"%
"
seniors
10
dependency ratio
\
10
10
•
0
"60
~
"/0 'l
Notes:
•
The values to the right of the venical rule are estimates. using
Statistics Canada's ·medium· baseline assumptions. Fenility
and mor- tality rates are assumed constant after 2018.
Source: Statistics Canada. Population Projections Section. Demography Division. Papulation Projections (or Canada. Provinces and
Territories. 1993-2016. and Papulation Projections (or Canada.
2017-2041. cat. 91-520·XPB (Ottawa. 1994).
Age Profiles of Taxes and
Transfers, Canada, 1995
Note:
Transfers include
expenditures.
implicit health care and educational
Source: Data from Statistics Canada's Soclal Policy Simulator and
Database Model.
Sp~~ing.Hike
ross
Tax Rate
Age Croup's
Year of Birth
Cross
Transfer Rate
Net
Tax Rate
SCenario____
Cross
Transfer Rate
45.5
49.7
51.3
53.0
55.6
58.7
63.1
66.0
67.1
67.2
14.3
18.8
20.5
21.6
22.4
25.6
29.2
32.0
33.1
33.2
(percencage of lifetime income)
1910
1920
1930
1940
1950
1960
1970
1980
1990
1995
31.2
31.1
31.2
32.3
34.4
34.5
35.6
'36.,2
37.1
38.0
45.5
49.7
51.3
52.9
55.2
57.9
61.4
63.3
63.8
63.9
14.3
18.6
20.0
20.6
20.8
23.3
25.8
27.1
26.8
25.9
38.2
Note: Discrepancies in the acdltlon of some rows are because of rounding.
Source: Authors' calculatlcns using data and methodology described in the text.
31.2
30.9
30.8
31.5
33.2
33.1
33.9
34.0
34.0
34.1
55.0
._
Cross
Tax Rate
a
•
It'8J
\ n~"b~rJ ' 0+ th
Q
rJ (.I(S.J)
G-ov4 De-t
91A,·vp./~"'Le.
2)
~ittMro!;Cc'"
3)
5ei~no~et (Ita "L+/Oth'on 7C.x )