Higher education squeezed as Canadian income tax is cut

March 17, 2000

MONTREAL

Canada's higher education sector and other hungry social programmes last month lost out to personal income tax reductions in the federal budget.

Finance minister Paul Martin announced C$58 billion (Pounds billion) in tax cuts and C$13 billion in new spending initiatives.

Of the new money, C$2.5 billion was promised over four years to the provinces for health, welfare and education, in addition to C$11.5 billion over five years from the last budget. The provincial premiers had been asking for C$6 billion a year, more than ten times the amount given in this budget, in an effort to make up for a five-year-old C$35 billion cut in the funds Ottawa transfers to the provinces for the jurisdictions of health, welfare and education.

Much of the new transferred money is likely to go to healthcare, with the amount for universities unclear.

The Canadian Association of University Teachers said that while lower transfer payments to the provinces has meant less money for operating budgets, the partially restored funds to the provinces do not guarantee anything. "The problem is a fundamentally flawed mechanism," said CAUT president Bill Graham. "Where or how and even if the extra money is spent, let alone spent on post-secondary education, is left largely to the provinces."

But the federal government was able to announce new money - nearly C$2 billion for spending on research and innovation in the private and university sectors. The government confirmed a recently announced implementation of 2,000 new research chairs and increased by C$900 million a university-corporate applied science partnership programme.

The Association of Universities and Colleges said it is now up to provincial governments to use the transfer increases to enhance core operating budgets.

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