Ottawa has introduced its 2019 budget, to mixed reviews from business.
While Finance Minister Bill Morneau’s fall economic statement was designed to address business concerns, business shouldn’t have expected much from this pre-election budget, which is tailored more to appeal to voters, analysts said.
“They did what they were going to do for businesses in the fall,” Sebastien Lavoie, chief economist at Laurentian Bank Securities, told the Financial Post. “You could argue those moves came too late, but it was clear there weren’t going to be any more.”
Nonetheless, there were some business-positive measures. More than $1.7 billion has been allocated for skills training, including the Canada Training Benefit, a new non-taxable credit to help pay employees for training. The benefit offers employees an annual $250 credit for training fees, up to a lifetime maximum of $5000. Ottawa has unveiled an EI Small Business Premium Rebate to offset some of the costs of the Canada Training Benefit. It has also introduced an EI Insurance Training Support Benefit offers employees 55 per cent of average income for up to four weeks of paid leave for training.
The budget offers added support for R&D in the form of “regulatory sandboxes” that allow new products to be tested without being immediately subject to regulation. It also alters the Scientific Research and Development Tax Incentive Program by removing a previous income threshold for firms conducting scientific R&D to qualify for refundable tax credits – 35 per cent for small and midsized firms and 15 per cent for others.
Business observers were disappointed that there wasn’t a broad corporate tax cut, leaving Canada’s corporate tax rates almost at par with the U.S. and negating a previous Canadian advantage of some 13 percentage points.
The Canadian Federation of Independent Business (CFIB) says the new Canada Training Benefit will increase the cost of the EI system by more than $300 million without any certain benefit to employers. But it responded positively to other measures that its says reflected its pre-budget recommendations, such as new measures to modernize regulation – including the creation of an External Advisory Committee on Regulatory Competitiveness – and changes to the Social Security Tribunal to resolve EI and CPP appeals more efficiently.
The Conseil du patronat du Québec (CPQ) also applauded new R&D and labour force measures, particularly the removal of obstacles to job integration and employee retention, namely through new incentives for experienced workers. It also welcomed the expansion of on-site job training and the introduction of the Canadian Training Benefit.
But the CPQ expressed its disappointment that the budget introduced a lot of new spending, and that despite good economic growth, nothing has been offered to balance the budget.