Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 11/2/2012

Canada - AG recommends Finance provide long-term fiscal analyses earlier 

November 2:  The Auditor General (AG) in Canada on 23 October 2012 released the fall 2012 report, in which the only tax issue addressed concerns a decision of the Department of Finance Canada as to whether to consider the impact of spending and tax measures on long-term fiscal sustainability* before recommending new policies.

The AG found that Finance's approach to preparing long-term fiscal analyses of these measures is generally reasonable, but that when recommendations are made, they ought to be provided to the Finance Minister in a timelier manner, before budget measures are approved.


The AG found that Finance officials prepare long-term fiscal analyses of spending and tax measures only if they consider it relevant to do so. Therefore, if the fiscal impact of measures being considered is not expected to change significantly relative to the size of the economy, Finance will not project the impact beyond five years. The AG concluded that this approach, in which officials use their professional judgment to determine whether the long-term fiscal impact needs to be considered, is reasonable.


However, the AG noted that when Finance does prepare long-term analyses, these analyses are not prepared in time to support budget decisions. Consequently, the AG recommended that, as Finance concludes the budget process, it analyze the overall long-term fiscal implications for the federal government and inform the Minister before budget measures are decided and approved. Finance agreed with the recommendation.


*Long-term fiscal sustainability refers to a government's capacity to finance its activities and debt obligations in the future without imposing an unfair burden on future generations.


Read an October 2012 report prepared by the KPMG member firm in Canada: Auditor General - Budget Making - Long-Term Impact of Budget Measures?




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