1988 Canadian federal budget

Michael Wilson presented an important reform of the tax system in June 1987.[2] As a result, the budget 1988 did not bring forward important changes to the tax system with a few exceptions:

• Increase in Child Benefits: after the Minister of National Health and Welfare presented a new policy on child care, the budget provides for a doubling of deductible child care expenses (from $2,000 to $4,000 per year for each eligible child) and repealed the overall maximum deduction limit of $8,000 per year. The Refundable Child Tax Credit is increased by a supplement of $100 in the 1988 tax year and another $100 in the 1989 tax year for low and middle-income families. That supplement is however reduced by 25% of the aforementioned child care expenses deduction;[3]
• National Labour-Sponsored Venture Capital Tax Credit : the tax credit previously introduced in the 1985 budget is extended :
  • Prior to the budget, only shares which benefited from a provincial tax credit could qualify for the federal tax credit ;
  • Starting in 1988 the provincial tax credit criterion is repealed.[4] ** The cap on cumulative federal and provincial tax credits is however maintained at 40% of the cost of the shares or $700, whichever is the lesser.[5][4]

The budget included changes of rules for associated corporations with a clarification of the definition of associated corporations to prevent multiple use of the small business deduction.[6]

Excise taxes on gasoline and aviation gasoline is increased by $0.01 per litre. The measure was projected to yield $300 million in yearly revenues.[7]

Ed Broadbent, leader of the New Democratic Party joked that the budget was a gift for opposition parties. Him and John Turner, leader of the Opposition, strongly criticized the increase in gasoline excise tax and the general fiscal policy of the Mulroney government. The NPD leader decried a policy that only benefits high-earners and raises taxes for the middle class and joked that “the only good thing about this budget is that it's almost certain to be the last Conservative budget.”[9][10]

Liberal's finance critic and Quebec lieutenant, Raymond Garneau blasted the budget as a “A Canada for the rich, but not a Canada for the average Canadian, not a Canada for the poor” pointing that Mr. Wilson increased taxes by $22 billion since 1984.[10]

Quebec's finance minister, Gérard D. Levesque declared he was disappointed that the federal government did not reduce its deficit faster and added that deficit reduction should have been the priority of a budget that was more a track record than a budget. Lastly, the minister expressed his disappointment towards the lack of measures to help families or Quebec's economic development whereas Alberta, Northern Ontario and the Atlantic provinces benefited from significant measures.[11]