Canada’s Liberal government will seek to address competitiveness challenges faced by the nation’s businesses in a budget update later this year amid pressure to respond to U.S. tax reform.
Finance Minister Bill Morneau, in an interview with Bloomberg News in Buenos Aires on Saturday, said the key themes emerging for his fiscal update — a document the finance department typically releases in October or November — will include business taxation, oil pipelines and the renegotiation of the North American Free Trade Agreement.
“We’ve pretty clearly telegraphed that we want to be listening to, broadly to Canadians and specifically Canadian businesses, to make sure that we maintain a level of competitiveness, given the sorts of change changes we’ve seen in our environment,” said Morneau. “I think those themes will be reinforced in our fall economic statement.”
Business groups have pressured Morneau to cut taxes in Canada after the U.S. cut its corporate tax rate from 35 percent to 21 percent, claiming the lost tax competitiveness is diverting investment away from Canada.
A June report from the Canadian Manufacturers & Exporters — an industry advocacy group — recommended the combined federal and provincial corporate tax rate should be cut to 20 percent from about 28 percent, and Canada should match U.S. accelerated capital cost allowance provisions to offer “an immediate 100 per cent tax write-off on qualifying capital asset purchases.”
Morneau said he hasn’t come to any conclusions yet but the consultation process will be done ahead of the fiscal update.
