Statement | Federal Fall Economic Statement tackles Canadian competitiveness
Canada enjoyed relatively steady growth over the past year but also faced continuing headwinds from trade uncertainty and deteriorating economic competitiveness that threaten a slowdown. With the newly signed USMCA trade deal between the US, Mexico, and Canada, businesses can breathe a sigh of relief on the trade front. Now, the Federal Government’s recent released of its 2018 Fall Economic Statement on November 21st is tackling Canada’s competitiveness problem. Contained within the announcement are some timely policy changes to improve Canada’s regulatory, tax, and trade competitiveness.
Highlights of the statement include:
- $14 billion worth of tax incentives over five years to accelerate business investment.
- Allow businesses to immediately write off the full cost of machinery and equipment used for the manufacturing and processing of goods.
- Allow businesses to immediately write off the full cost of specified clean energy equipment.
- Create an Accelerated Investment Incentive, which will allow businesses of all sizes and in all sectors of the economy to write off a larger share of the cost of newly acquired assets in the year the investment is made.
- $800 million over five years for the government’s strategic innovation fund to shore up investment across the country.
- A new export diversification strategy that aims to diversify away from the US and increase Canada’s overseas exports by 50 per cent by 2025.
- $1.1 billion will be invested over 6 years to help Canadian businesses access new markets and improve trade infrastructure.
- Renewed action to remove intra-Canadian trade barriers in four areas:
- Transporting goods between provinces and territories
- Harmonizing food regulations and inspection rules
- Aligning regulations in the construction sector
- Facilitating greater trade in alcohol between provinces and territories
- A number of measures designed to modernize and reform Canada’s regulatory system
- Explore making competitiveness a permanent part of regulator mandates
- Introduce an annual modernization bill to keep regulations up-to-date
- Establish a dedicated External Advisory Committee on Regulatory Competitiveness
- Launch a Centre for Regulatory Innovation
- Enhance Government’s capacity to develop and implement effective regulations
The initiatives contained in the Fall Statement have been partly a response to growing competitive challenges from the US, after an overhaul of the country’s tax code came into effect at the start of this year. 2017 also saw foreign direct investment into Canada drop to its lowest levels since 2010. These policy announcements are an important step in addressing Canada’s competitive challenges, nonetheless ,the Tri-Cities Chamber of Commerce echoes the sentiments of the Canadian Chamber of Commerce in calling for a more comprehensive review of Canada’s tax system.
For a more comprehensive summary of highlights, see the Canadian Chamber of Commerce’s Rapid Policy Update here.
To read the Federal Government’s 2018 Fall Economic Statement, click here.