Finance Minister Bill Morneau. (Sean Kilpatrick/The Canadian Press)

Ottawa’s fall update features $16B competitiveness response to U.S. tax reforms

Bill Morneau had faced pressure to lower the corporate tax rate in response to major tax and regulatory reforms in the U.S.

The federal Liberals have come up with a $16-billion answer to Canada’s competitiveness concerns.

Ottawa’s long-awaited plan to help Canada compete with the United States for investment dollars is the centrepiece of its latest fall economic statement, which forecasts slightly deeper annual deficits over the coming years.

Finance Minister Bill Morneau had faced pressure to lower the corporate tax rate in response to major tax and regulatory reforms in the U.S.

But in Wednesday’s economic update Morneau chose to use billions worth of extra federal fiscal space to offer tax incentives for businesses who invest in Canada.

Morneau said the government is benefiting from “a very good situation – but we know that we have to consider investments in the future…. That’s why we listened to and heard the anxieties of the business sector.”

By far, the biggest-ticket items among the proposed tax measures are changes that would enable businesses to immediately write off the full cost of some types of machinery and equipment, and allow companies of all sizes and in all sectors to expense a larger share of newly acquired assets.

READ MORE: Federal fall update expected to offer more support for struggling news outlets

The new write-offs alone are expected to cost the federal treasury about $14 billion over the next half-decade.

As part of its competitiveness plan, the government also proposes about $1.1 billion over the coming years towards efforts to open new market access for Canadian exporters. It is also looking to add another $800 million over five years to its strategic innovation fund, which supports “innovative” investments in all sectors.

A stronger economy has given the government about $22 billion in extra fiscal room over the coming years, compared to what federal forecasters projected in last February’s budget. But the new initiatives will also contribute to slightly larger-than-expected annual shortfalls, beginning next year.

The government is now projecting deficits of $18.1 billion in 2018-19, $19.6 billion in 2019-20 and $18.1 billion in 2020-21. After 2020-21, the annual shortfalls are expected to shrink each year to $11.4 billion in 2023-24.

The fiscal update contains no timetable to eliminate the Liberals’ deficits. The government has drawn criticism from the Opposition Conservatives and some economists for failing to provide a timeline back to balance, especially with the economy running close to full strength.

Following the 2015 election, the Liberal government abandoned pledges to run annual deficits of no more than $10 billion and to balance the books by 2019. Instead, it has focused on reducing the net debt-to-GDP ratio – also known as the debt burden – each year.

The debt-to-GDP ratio is now projected to gradually fall from 30.9 per cent in 2018-19 to 28.5 per cent in 2023-24.

Morneau’s fall economic statement also proposes additional support for the country’s struggling journalism industry by enabling non-profit news organizations to receive donations and through the creation new tax credits – all of which are part of a plan expected to reduce government revenues by $600 million over five years.

The government plan also proposes $240 million towards sustaining Canada’s wild fish stocks, with a focus on Pacific salmon.

The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

Kootenay-Columbia incumbent MP responds to Trudeau brownface scandal

Stetski proud of NDP leader Singh’s reaction, which focused on people not power

Liberals’ Kootenay-Columbia candidate stands by Trudeau despite scandal

Robin Goldsbury says the prime minister’s racist photo is a learning opportunity

Canal Flats pavilion gets a financial boost

Trust provides over $1.9 million for 12 community projects

Windermere carnival this Sunday

Fundraiser event features bouncy castles, games, reptile room, laser tag, food and fun

VIDEO: Trudeau asks Canada to look to current, not past, actions on race

Liberal leader says he never spoke about the racist photo because he was embarrassed

Woman stabbed in downtown Nelson

Victim is in hospital, suspect is in police custody

Horvat paces Canucks to 6-1 pre-season win over Oilers

Vancouver improves to 3-1 in NHL exhibition action

Legislature gifts, clothing, travel need better control, B.C. auditor says

Audit follows suspensions of managers by Speaker Darryl Plecas

‘Really disturbing:’ Trudeau’s racist photos worry B.C. First Nation chief

Wet’suwet’en Chief concerned the photos will sow fear in Indigenous communities

‘Unacceptable’: What politicians have to say about Trudeau in blackface

Calgary Mayor Naheed Nenshi: ‘When I saw that picture last night, certainly it was a sucker-punch’

‘He’s trying to kill me’: Victoria police commandeer boats to reach screaming woman

No charges laid and civilians to be awarded honours after incident on Gorge Waterway

VIDEO: B.C. man accused of assaulting sex worker loses temper in interrogation

Defence lawyer says statements made by accused Curtis Sagmoen should be deemed inadmissible

John Horgan promises action after fatal mid-Island bus crash

Premier cites students, local Indigneous community as reason to repair the road

Most Read