Morneau’s fourth budget marks a hard shift back toward middle class issues after addressing business competitiveness in the fiscal update
Finance Minister Bill Morneau delivered a pre-election budget built for voters, not businesses, disappointing those who hoped for a broad-based corporate tax cut, a comprehensive review of Canada’s aging tax code or other measures to boost competitiveness.
Nevertheless, some of the key pillars of Morneau’s fourth budget, while designed for a different audience, will also benefit Canadian businesses, said Craig Alexander, chief economist at Deloitte Canada. Among the items that will have the most obvious impact is spending related to skills training. A new Employment Insurance Training Support Benefit offers 55 per cent of average income for up to four weeks of paid leave to support training.
The budget made some moves to address regulatory burden in the form of “regulatory roadmaps” to address red tape in agri-food and aquaculture, health and biosciences and transportation and infrastructure. The measures include the introduction of “regulatory sandboxes” or “safe spaces” that allow innovative products and services to be tested without immediately being subjected to regulatory requirements.
While many of the moves were welcome, they don’t necessarily address growing concerns about slumping business investment and a corporate tax rate that has now been undercut by reductions south of the border. The U.S. changes, which took effect January 2018, dropped the combined federal and state corporate tax rate from 38.9 per cent to 25.8 per cent, bringing it below Canada’s combined rate of 26.8 per cent.
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