Given the unprecedented challenges Canadian businesses have faced the past two years, it has it has never been more important for the federal government to focus on economic growth.
The federal government set out an ambitious agenda with its Budget 2022, revealed April 7th. Is it on the right track in helping Canadian business deal with the avalanche of challenges it is facing — multi-wave pandemic, inflation that has reached a thirty-year high, supply chain disruptions, extreme weather events and geopolitical turmoil? It’s a “mixed bag” according to Canadian Chamber of Commerce’s President and CEO, Perrin Beatty.
A number of items announced in the budget will be welcome measures for Canadian businesses, Beatty said. They include:
- The gradual phase out of the small business tax rate when taxable capital reaches $50 million instead of $15 million.
- Investments in the critical minerals industry to support the full development of supply chains, from extraction through to processing and recycling.
- Various measures to support the net-zero transition, including the introduction of a tax credit for carbon capture, utilization and storage, incentives for Zero Emissions Vehicles, and investment tax credits for net-zero technologies.
- Funding towards a trusted employer program for Temporary Foreign Workers that will address labour shortages.
- Support for exploiting the opportunities from the legal cannabis sector.
There were several elements in the budget, however, that Beatty believes will undermine much-needed economic investment and growth, including:
- The absence of debt relief for businesses that used government support programs such as the Canada Emergency Business Account.
- A lack of focus on cybersecurity supports directly for the private sector.
- Only a partial review of the tax system rather than a comprehensive review, particularly given the implementation of additional measures on a sector basis for financial institutions and digital services.
“The gap between Canada’s potential and our performance continues to grow. It has never been more important for the government to view Canadian businesses as a partner, and not as a problem. Our competitors are squarely focused on how to attract investment and growth. That needs to be our top priority too, “ Beatty said.
Beatty says it’s important that economic growth be private sector-led.
“While our public finances have benefitted from higher inflation rates and energy prices and low interest rates, we cannot borrow or inflate our way to prosperity. Federal spending needs to be both fiscally responsible and targeted at where it can generate genuine economic returns. Generating economic growth requires carefully using all the tools available, including tax, regulatory, labour and infrastructure policy to attract private sector investment,” Beatty added.