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What to Expect When You’re Expecting (a Federal Budget!)

Can you feel the excitement in the air? A brand new federal budget is about to be delivered into the world. A precious bundle of joy, full of hopes, expectations and the future of the Canadian economy will come screaming into the House of Commons in a couple of weeks. So what should we expect?

 

Three big things are keeping us on the edge of our seats. This baby will have larger deficits than last year amid economic uncertainty. She’ll be full of exciting details around previous announcements—the innovation agenda, the infrastructure bank, the FDI hub. Finally, we’ll see some nasty surprises coming from the review of tax credits. Wahhh!

 

The budget is unusually late this year. We’re now expecting it on March 21, after a number of delays. Pity the poor Finance Department. Last year’s budget was hit by a sharp decline in oil prices and an economy that was weaker than expected. This year’s budget is upended by Hurricane Trump—normal expectations around trade and business investment are out the window.

 

There is now more uncertainty than we’ve seen in decades, and the federal government has run out of fiscal room. The deficit will reach $26 billion this year, and that’s before the additional costs for new health deals with the provinces. For years, we’ve advocated balanced budgets, or at least a solid plan to return to balance. The Finance Department’s current forecasts show this will not happen before 2050. (This baby will be middle-aged by then.)

 

Growing deficits make it unlikely that we’ll see any large new programs. Instead, this budget is likely to fill in details around previous announcements. Remember, Budget 2016 left many of the tough questions to be filled in after consultations. The government had said Phase 2 of the infrastructure plan, with the “fast, efficient trade corridors” would be announced in the next year. The Innovation Agenda, a “bold new plan” to redesign how Canada supports innovation, was coming later. Health spending would be determined. A review of tax expenditures was coming soon.

 

We’re excited about the innovation program, but it’s that last promise that has us most worried. The government announced an internal review of all federal tax credits, with a view to eliminating poorly targeted and inefficient ones. A panel of external experts is in place, but there has been no consultation.

 

We certainly support simplifying the tax system, but some of these tax credits are very important to business and Canadians. For several months, we campaigned vigorously to oppose a plan to tax employer-sponsored health and dental plans. The plan would have cost workers thousands of dollars and was only abandoned by the government after tens of thousands of emails and negative media.

 

The government is looking for revenue so we’ll likely see a few unpleasant surprises in the budget. It would be odd if the government reviewed 150 tax credits and decided to keep all of them. So, we just don’t know if the capital gains inclusion rate, the federal dividend tax credit or flow-through shares might be on the chopping block. We’ll be watching the budget closely to determine the positive (innovation agenda, infrastructure) and negative impacts (tax credits and deficits) on business. I’m worried this baby could be adorable and smiling on the surface but with some smelly surprises hidden away.

 

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

Canadian Chamber of Commerce

613.238.4000 (284) | hbrakel@chamber.ca

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Auditor Generals Report 2015

Bonnie Lysyk the Auditor General for the Province of Ontario released her report last week. The most scathing report in the history of the Province, suggesting that programs are riddled with incompetence and mismanagement.

 

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Small Business Too Small to Ignore

Small businesses across Canada need to voice their concerns to show decision-makers that they are “too big to ignore”. Show your support, watch the video and share.
 

 

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CANDIDATES Its Election Day

Today Cambridge will Elect its Political Leadership for the next 4 years.

 

 

 

 

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“Silly Season ! October 27th Election

Get ready, they'll be knocking on your door looking for your vote. HOWEVER thisyear you don't need to go out and vote, you can vote in your jammies. That's right, ONLINE and Telephone voting is here in Cambridge. Odd that we are technically so far ahead of those other areas of our Region. Look, the internet is over 25 years old (in our homes), this is the 21st Century, I should be able to vote in my pajamas, its about time!

 

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Politics Hit a New Low in the Region of Waterloo

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Member Survey Results on LRT

We often take criticism, but generally from the Minority. We aim to listen to our Members and represent their views. A recent survey showed 66% are opposed to the Region of Waterloo's LRT plan and 81% are in favour of there being a question on the ballot about it in the fall Municipal Election. Lets see if Council listens to the Chamber and by the way, the Majority.....

 

 

 

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Politicians Have One Job

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The NEW Unacceptable Phrase "No More Taxes Please"- What?

Yes it's true, there is a growing number of people who look at tax cuts or no increase as being NEGATIVE, believe it or not. Some people actually say they want to pay more. I am totally perplexed, never in the history of time have people said lets pay more, have they? I'm I missing something? Have I gotten off on the wrong planet? I sure hope I didn't.

 

 

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