Economic Update Boosts Private Investment, Maintains Revenue for Public Services
November 21st, 2018
Regina–Lewvan MP Erin Weir welcomes today’s federal economic statement, which provides targeted tax incentives to boost new investment rather than costly across-the-board corporate tax cuts.
“The fall economic statement is an intelligent and progressive response to the competitive challenge posed by President Trump’s sweeping tax cuts,” said Weir. “The Canadian government is providing focused incentives linked to new investment, rather than slashing taxes for profitable corporations and hoping they reinvest some of the money.”
Specifically, the economic statement will allow companies to immediately deduct all investments in manufacturing and clean energy equipment, and to immediately write off a larger share of other capital investments in Canada.
Changing the timing of these tax deductions will make new investments more attractive for business without reducing the corporate tax rate. The incentives will cost $5 billion next fiscal year as they kick in, but their annual cost will decline to just over $1 billion by 2023-24 as companies use up the write-offs.
“Cutting the corporate tax rate would have cut federal revenues in every future fiscal year,” noted Weir. “Providing up-front incentives will do more to boost private investment, while maintaining long-term fiscal capacity to pay for needed public services.”
The economic statement seems to take a similarly targeted approach on internal trade, proposing specific solutions to particular problems in trucking, food inspection, building codes and alcohol. However, we must ensure that the new External Advisory Committee on Regulatory Competitiveness does not invoke rhetoric about “inter-provincial trade barriers” to reduce important public interest regulation to the lowest common denominator.
“In contrast to sweeping tax cuts and deregulation south of the border, today’s economic statement outlines a more sensible, targeted approach to Canadian business taxes and regulations,” concluded Weir.