OTTAWA: In a fiscal update on Wednesday (Nov 21), Canada’s finance minister ditched a promise to balance the budget next year, and instead rolled out measures to help companies compete with the United States.
|Canadian Minister of Finance William Morneau speaks during a CNN Debate on the Global Economy during the World Bank Group / International Monetary Fund Annual Meetings at IMF Headquarters in Washington, DC, on Oct 12, 2017. (SAUL LOEB/AFP)|
The delivery of Can$17.6 billion (US$13.3 billion) in new spending and forgone revenue over six years comes after US President Donald Trump brought in massive US corporate tax cuts that have taken a bite out of investment in Canada.
The Canadian measures include accelerated capital cost allowances and more tax write-offs of equipment and machinery to encourage businesses to invest in Canada, sooner.
The government also pledged to build additional port and rail infrastructure to get more goods to Atlantic and Pacific ports and tap new overseas markets in an attempt to diversify trade.
Nearly 80 per cent of Canada’s current trade is with its US neighbour.
The government also offered a hand to struggling Canadian media by allowing non-profit news organisations to apply for charitable tax status, and providing tax credits to newsrooms that expand local coverage as well as to Canadians who buy digital newspaper subscriptions.
Opposition parties spent the day hammering Prime Minister Justin Trudeau for breaking his balanced budget promise.
Trudeau had vowed in the 2015 election campaign to post small budget deficits of about Can$10 billion per year, before returning to balance in 2019 when he will again face the electorate.
In a speech to parliament, Finance Minister Bill Morneau said dealing with “a new administration in the United States” has posed “some interesting challenges.”
“The current (US) administration has moved forward with an aggressive package of tax cuts for large corporations,” he noted.
“Some have lobbied us to match those measures,” he said. “If we were to do that, it would add tens of billions in new debt (and) it would do more to worsen income inequality in Canada than improve it.”
In his fiscal update, growth was forecast to slow to 2.0 percent in 2018 and 2019, while the government plans to continue posting deficits of more than Can$10 billion through to 2023-24.
It was estimated in Morneau’s February budget at Can$18.1 billion this year.
In the update, higher spending (Can$344.1 billion) was forecast to outpace a boost in revenues (Can$328.9 billion), but the deficit was expected to remain unchanged.
Meanwhile the revised federal debt was predicted to rise to Can$687.7 billion or 30.9 per cent of the economy this year.
- The Trump tax cuts just became an issue in the Pa. Governors race
- Voters back debt reduction over tax cuts
- Corporate America loved Trump tax cuts, but the love affair may end
- Higher gas prices are eating into Trump tax cut, trimming spending by Americans
- Kingston Properties gets boost from Trump tax cuts
- Pelosi says Dems will work to roll back Trump tax cuts if they retake Congress
- Trump tax cuts trickle down to Pa. utility customers
- Dipping into retirement funds may be the answer, not tax cuts
- Corporate America Has 1.64 Trillion Reasons to Love Tax Cuts
- Trump mocks Dem lawmaker for introducing bill to repeal GOP tax cuts