Canadian Prime Minister Justin Trudeau recently spent C$14 Billion on tax relief for the country’s businesses. The fiscal update that was revealed showed capital investment write-offs that are implemented on a temporary basis, alongside a promise to push export markets, create direct cash sources for businesses, and cut down on red tape.
Businesses Claim They are Pleased But Not Fully Satisfied
The tax breaks were announced as a move to counter the increasing competitiveness in comparison to the United States, after President Trump cut corporate taxes in the USA earlier this year. Businesses across Canada showed their support towards this mini-budget development, while maintaining that the government still had a lot of work to do.
The business sector sent out calls to the Trudeau government to work more extensively on tax reforms, reduce the country’s fiscal deficit, streamline business rules and regulations, and resolve the oil price crisis currently plaguing the province of Alberta.
Alberta’s oil price crisis is gaining importance owing to its impact on the entire country, as Alberta loses millions of dollars in the form of royalty arising from extremely large discounts on locally produced heavy crude, in comparison to benchmark prices of the United States.
Tax Breaks to Be Beneficial for All States Including Alberta Claims Government
Perrin Beatty, President of the Canadian Chamber of Commerce said that while the Canadian government has done quite a bit for accelerated write-offs for capital investments, there is room for more to be done. The measures will result in investments in the manufacturing sector that can be completely written off, and the marginal tax rates will be reduced to strongly compete with that of the United States, thereby helping businesses in all sectors including oil and gas in Alberta.
On the other hand, the national fiscal deficit has now grown to C$83.5 in the past five years, and is estimated to grow to a massive C$765 Billion by 2024.
The tax breaks are largely considered as a good step to strengthen businesses in Canada at least on a temporary basis, along with the tentative agreement of continental trade that has been made with Mexico and the United States. Senior economist Brian De Pratto has cautioned that while the government’s response to market competitiveness will be a useful funding initiative, it is a little worrying that the government has decided to spend most or all of its fiscal gains