The Canadian Chamber of Commerce has concluded that last week’s federal budget contains many interesting measures, however it fails to address fundamental issues for Canadian businesses and their employees.
The national business community asked and was looking for the government to focus on economic fundamentals such as the growing competitiveness gap from lower U.S. corporate tax rates, the need to attract more private sector investment in all regions of Canada, and a realistic plan to balance the government’s books. Overall, there was very little support in the budget for large or small businesses.
The cost of running any type of business is rising. Without a strong and vibrant private sector, there is no sustainable method to pay for the increased government spending incurred through this year’s budget.
Following the highly unpopular introduction of new rules last year related to the taxation of small businesses, chambers of commerce and boards of trade have been asking the federal government for a major overhaul of Canada’s archaic and generally ineffective corporate tax system which is not viable for companies operating in competitive global economies.
While the budget does provide some clarity around the taxing of private corporations, the system remains overly burdensome for businesses that should be focusing their efforts on growth and not dealing in government red tape. It is now more urgent than ever to have a full and independent review of Canada’s tax system.
A major concern of the business community and many other stakeholders is the federal government’s failure to provide a responsible plan to balance the budget and the accompanying unrealistic economic expectations contained in Finance Canada’s analysis. By adding a further $27 billion to the national debt in 2018, the government believes that we can spend our way to prosperity.
If the national debt continues to escalate when times are generally good as they are at present, we can only speculate on what Canada’s national finances will look like the next time there is a significant downturn.
Canada needs to start a review of our tax system and overall economic competitiveness and act with urgency to implement measures that will retain and attract investment in Canada. This is the only sustainable and realistic approach to shield the national economy against the challenges ahead. And ultimately, this is the only way to pay for the current government’s ambitious spending and program plans.