Chamber pleased with Feds committment to eliminating deficitTuesday, February 11, 2014 by: Kate Adams
North Bay & District Chamber of Commerce
Overall this budget affirms the government’s commitment to boost Canada’s competitiveness.
It provides details on the delivery of promises made in past announcements and very little in terms of ambitious new investments.
President Derek Shogren stated “no new taxes being introduced is always good news for businesses during challenging times where all other costs seem to be rising exponentially.”
The February 11 federal budget stays the course towards eliminating the deficit, thereby protecting Canadian taxpayers from higher interest charges, while boosting confidence.
The federal government’s latest official forecast calls for a significant narrowing in the budget deficit to $2.9 billion in fiscal 2014-15 from the prior year’s shortfall of $16.6 billion. Ottawa then looks for the budget to get back in the black in 2015-16, with a $6.4 billion surplus.
Canada’s relatively favourable fiscal position still sets it aside from most other major industrialized economies and provides a strategic advantage for long term growth, through a few initiatives that are favourable to Northern Ontario:
1. Tackling skills shortages by ensuring Aboriginals peoples, the disabled and young people get the training and tools they need to participate more fully in the workplace continues to be a high priority for the Canadian Chamber. While not immediately, the budget confirms significant new investments in these areas of the education system.
2. The Federal government recognizes the deficiencies the municipalities and provinces face in public infrastructure. The budget proposes to allocate a further $1.3 billion over two years on a cash basis to support additional strategic investments in public infrastructure and transportation services across Canada.
3. The government highlighted its new Global Markets Action Plan (announced in November 2013). The plan will target emerging and established markets with broad Canadian interests, as well as emerging markets with specific opportunities for Canadian businesses. Three-year market access plans for each of these priority markets will be developed, implemented and updated regularly, mobilizing partnerships across governments and the private sector to make the pursuit of Canada’s commercial interests a coordinated national effort.
4. The government recognized the frequency of remittances (source deductions in respect of employees’ income tax, CPP contributions and EI premiums) can be onerous for small business owners, especially those who have to remit on a frequent basis. To make it easier for businesses to prepare, file and pay taxes, the budget proposes to reduce the maximum number of payments businesses have to prepare and submit to the Canada Revenue Agency (CRA). It is achieving this by increasing the threshold level of average monthly withholdings at which employers are required to remit.
5. The government is proposing to eliminate the need for individuals to apply for the GST/HST credit and to allow the CRA to automatically determine if an individual is eligible to receive the credit. In addition to simplifying tax filing for individuals, this measure will eliminate the need for the CRA to issue notices each year to about two million applicants who do not qualify for the credit.
6. To facilitate corporate reorganizations, the government proposes to simplify compliance in terms of accounting and reporting of GST/HST for transfers of business assets by one member of a closely related group of corporations and/or partnerships to a new member of that group.
7. The government is committed to maintaining a modern and efficient tax system. Part of doing so means frequently updating tax legislation. To make it easier for taxpayers to know the status of proposed tax measures, the budget announced that legislation will be introduced to require the Minister of Finance to table in Parliament annually a list of the government’s outstanding tax measures.
8. The government noted that responsible resource development is an important part of the government’s economic plan to create jobs, growth and long-term prosperity. The government will continue to consult with Aboriginal partners on maximizing opportunities related to resource projects. Territorial governments, Aboriginal groups and industry have repeatedly expressed the need for more predictable regulatory processes in the North that enhance environmental protection, while encouraging exploration and investment.
9. As reiterated in the 2013 Speech from the Throne, ensuring safe and responsible resource development remains a key priority for the government. The government noted that developing the infrastructure to build safe pipelines and strengthening the tanker safety regime to transport our energy exports to new markets is essential for Canada’s future prosperity and security. The budget proposes to provide $28 million over two years to the National Energy Board to review project applications, like the TransCanada Pipelines Limited’s Energy East Pipeline Project, within legislated timelines to provide timeline certainty. This funding will be fully cost-recovered from industry.
10. The government recognizes that Canada’s North has tremendous economic potential, particularly in the mining and oil and gas industries, and in renewable resource industries. The budget provides $40 million over two years (starting in 2014–15) to renew CanNor’s Strategic Investments in Northern Economic Development (SINED) program. This program focuses on enhancing the economic infrastructure of the territories; developing the capacity of Northern organizations and individuals to help them take advantage of economic opportunities; promoting economic diversification; and increasing dialogue on Northern economic development issues. Recognizing they are speaking of more northern and rural areas of Canada, we hope that this can include Northern Ontario resources such as the Ring of Fire.
11. To keep pace with the needs of Canadians in rural and Northern communities, the budget provides $305 million over five years to extend and enhance broadband service to an additional 280,000 Canadian households, which represents near universal access. The government will announce further details about the new program in the coming months. Our small and rural business deserves access to world markets to remain competitive.
Shogren applauded the government for recognizing the importance of eliminating the deficit but cautioned by saying “a lot of things still need to go right to balance the books by fiscal 2015-16, including sustained spending restraint and a rebound in growth.”
The latest forecast projects annual program spending growth of roughly 1.9% in 2013-14, -0.4% in 2014-15 and 3.7% in 2015-16.
Most of the savings realized over the forecast horizon are a result of managing compensation costs and by moving National Defence funding for major capital procurements to future years.In light of still modest economic growth, the government continues to incorporate additional prudence into the projections (i.e. a $3 billion annual cushion) to allow for a small underperformance in the economy.
Shogren stated “this is prudent planning that must be maintained to ensure economic growth for the businesses in our region.”
*With excerpts from the CCC detailed analysis