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CGA-Canada Proposals |
Budget 2009 |
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Tax Competitiveness
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| Keep income taxes on a downward track. |
Budget 2009 will deliver $20 billion in personal income tax relief over 2008-09 and the next five fiscal years. Effective January 1, 2009, this includes:
• Increasing the basic personal amount
• Raising the upper limit of the two lowest personal income tax brackets by 7.5 per cent above the 2008 levels
• Increasing the amount that low- and middle-income families can earn before their federal child benefits are phased out
• Investing $580 million to double the tax relief provided by the Working Income Tax Benefit
• Increasing the Age Credit amount by $1,000
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| Extend the Capital Cost Allowance (CCA) and ensure the rates in Canada reflect the actual life of assets |
Budget 2009 includes measures to position Canada’s economy for long-term recovery by:
• Introducing a two-year, 100 per cent CCA rate for investment in computers
• Extending the temporary 50 per cent straight-line accelerated CCA rate to investment in manufacturing or processing machinery and equipment undertaken in 2010 and 2011
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| Harmonize provincial sales taxes with the federal goods and services tax |
The government remains committed to working with provinces and territories on harmonization |
| Appoint an independent panel of experts to simplify Canada’s tax legislation |
No action taken |
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Comments:
A simple, transparent and fair tax system with low, internationally competitive tax rates is integral to economic recovery and growth in Canada. CGA-Canada supports the government’s ongoing efforts to reducing the tax burden for those who need it most, but Canada’s tax system still remains overly complex and cumbersome. Simplifying the tax system would be of benefit to Canadian taxpayers and reduce the cost to government.
Grade: Pass
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Supporting Small And Medium-Sized Enterprises (SMEs)
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| Introduce mechanisms to facilitate improved access to capital, providing a needed boost to Canadian business. |
Under the Extraordinary Financing Framework, the government is providing up to $200 billion in existing and new measures. This includes:
• An additional $50 billion for the Insured Mortgage Purchase Program, increasing its size to $125 billion
• $13 billion to increase the lending of Crown Corporations, such as Export Development Canada (EDC) and the Business Development Bank of Canada (BDC). At least $5 billion of this incremental financing will be delivered through the new Business Credit Availability Program
• An increase in the loan limit for small businesses under the Canada Small Business Financing Program
• $12 billion for a new Canadian Secured Credit Facility to help consumers and businesses access financing to vehicles and equipment
Increase to $500,000 the amount of small business income eligible for the reduced federal tax rate of 11 per cent, effective January 1, 2009
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| Create incentives for new business investment. |
• Providing $200 million over two years to support industrial research for small and medium-sized businesses to encourage innovation |
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Comments: The importance of the SME sector to Canada’s economic well-being cannot be overstated. Small and medium-sized businesses have driven job creation and economic growth for years, and Canada’s entrepreneurs will play a pivotal role in the economic recovery process as well.
The government has acted wisely by supporting Canada’s SMEs, ensuring businesses of all sizes have access to affordable financing and stimulating business investment – measures that businesses need to grow and create jobs over the long-term.
Grade: Pass
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Meeting Tomorrow's Challenges
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| Invest in Canada’s knowledge infrastructure |
$2 billion for repair, maintenance and construction of post-secondary institutions |
| Enhance the Employment Insurance (EI) program |
Budget 2009 supports those Canadians affected by the global slowdown with:
• A five-week extension to all regular EI benefits for two years
• Maintain EI premium rates of $1.73 for 2009 and 2010, providing relief of $4.5 billion over two years |
| Make strategic investments in skills and training that have short- and long-term results |
• $1 billion funding increase over two years for training delivered through the EI program
• $500 million to extend EI benefits for workers in longer-term training
• $500 million over two years in a Strategic Training and Transition Fund to support the particular needs of individuals who do not qualify for EI training |
| Invest in older workers to ensure a viable, skilled workforce. |
An additional $60 million over three years for the Targeted Initiative for Older Workers to support older workers and their families in a larger number of cities |
| Improve the integration of internationally educated and trained workers into Canada’s workplace. |
$50 million over two years for a national foreign credential recognition framework in partnership with provinces and territories |
Comments: Investing in Canada’s workforce capabilities and knowledge industry is smart public policy. It is critical to protect today’s jobs and prepare for tomorrow’s job opportunities. Policy aimed at enhancing EI benefits, creating employment through infrastructure projects, expanding post-secondary capacity as well as improving access to education and training is essential in that it supports a strong and sustainable economic recovery for a competitive Canada.
Grade: Pass |
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Fiscal Management
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| Balanced budgets are preferable to running deficits. If a deficit is unavoidable, it must be short-term and temporary in its nature, with a plan to move budgets back into surplus. |
The government is projecting deficits:
• $1.1 billion in 2008-09
• $33.7 billion in 2009-10 (of which $18 billion is attributed to new measures proposed in Budget 2009)
• $29.8 billion in 2010-11
• $13 billion in 2011-12
• $7.3 billion in 2012-13
The government projects a return to a surplus situation in 2013-14 ($0.7 billion).
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| Build a prudence factor within the annual federal budget to better cushion Canada’s economy. |
No action taken. |
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Comments: Despite its unwavering stance on balanced budgets, CGA-Canada understands the federal government is faced with a sizable budgetary deficit due to declining revenues and low growth. Over the medium term, the government must not deviate from its responsibility to restore the nation’s finances as the global recession eases and Canada emerges from the turmoil. The deficit must remain a short-term and temporary tool. Moreover, given the uncertainty about the length and depth of the recession, CGA-Canada believes the government should adopt more prudent budgeting principles, including a reserve fund to protect a fragile economy.
Grade: Pass.
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Regulatory Efficiency
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| Reduce the overall and cumulative regulatory burden/compliance costs on small and medium-sized enterprises (SMEs). |
No action taken |
| Strengthen securities regulation through the creation of a new pan-Canadian framework. |
Legislation to create a common securities regulator for those willing to participate will be introduced in Parliament and a transition office will be set up. |
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Comments:
CGA-Canada welcomes the government’s commitment to table a Federal Securities Act for Canada for those willing to participate. Recent initiatives to improve the Agreement on Internal Trade concerning labour mobility and dispute resolution are much needed.
Regulatory reform ought to be a priority throughout government. According to a 2005 report, it costs Canadian businesses a staggering $33 billion a year to comply with the countless rules imposed by all levels of government. Canadian businesses can ill-afford this expense.
In addition, the federal government needs to deliver and report to the public on its promised 20 per cent reduction in the regulatory requirements and information obligations of key departments and agencies. The timeline for achieving this target was November 2008.
Reducing red tape should be an ongoing concern.
Grade: Pass
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