The Liberal government in Yukon has delivered its first budget, the largest in the territory's history, at $1.44-billion.

Premier Sandy Silver called the budget "clear and measured" Thursday in an address to the legislature.

"Because we need the ideas of Yukoners, our future budget process will include engagement," said Silver, who is also finance minister.

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"We will deliver a series of budgets that address their concerns and speak to their hopes for themselves and the territory."

Yukon's last fiscal year's budget was worth $1.39-billion.

About $1.1-billion, or 77 per cent, of the current budget came from the federal government, up from last year's $946 million.

That includes annual federal transfers such as territorial formula financing, health and social transfers and money for child welfare, mine sites, land claims implementation and French language services.

Yukon's Liberals were expecting a modest surplus of $6.5-million this year, but forecasted major deficits in the years ahead.

Previous territorial budgets didn't fully account for long-term spending on new, large assets, Silver said.

"Planning that more prosperous future means reconsidering our current path," he said, adding the government would establish a financial advisory council that is expected to provide initial budget recommendations in October.

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It is slated to start consultations in June with the business community, First Nations and municipal governments.

The territorial government had vowed to eliminate the small business tax and reduce the general corporate rate from 15 per cent to 12 per cent. It kept the latter promise but broke the first.

Rather than ditch the small business tax altogether, the government is cutting it from three per cent to two per cent.

The tax cuts mean revenue was expected to drop by $2-million this fiscal year.

Some of the losses could be recouped through a tobacco tax hike, which was slated to bring in $1.1-million this fiscal year.

The tax on one cigarette or one gram of tobacco is set to increase from 21 cents to 25 cents on July 1, before rising to 30 cents next April.

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In total, the government anticipated about $110.6-million in revenue would be generated this year through taxes on liquor and tobacco, for example, as well as personal and corporate income taxes.

Money from other sources, such as fines, motor vehicle and business licensing fees and the sale of land was expected to bring in about $39-million.

The Liberals won the November 2016 election, ending 14 years of rule by the Yukon Party.