Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures

feat. Brian Kingston

Standing Committee on Finance
May 9, 2018

Mr. Chair, committee members, thank you for the invitation to take part in your consultations on Bill C-74.

The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies, in all sectors and regions of the country. Our member companies employ 1.7 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes, and are responsible for most of Canada’s exports, corporate philanthropy, and private-sector investments in research and development.

In the Council’s pre-budget submission we asked the government to introduce a comprehensive strategy to promote economic growth, encourage private investment and strengthen competitiveness. Among other recommendations, we called on the government to undertake a comprehensive review of Canada’s tax system with the goal of strengthening the incentives for investment and growth. Since then, the need for a comprehensive review has only been intensified by the controversy over the government’s passive investment proposals and the recently passed U.S. Tax Cuts and Jobs Act.

While we welcome the changes made to the passive investment proposals in Budget 2018, the government could have done more to address the root of the problem. Rather than lowering the small business tax rate further and restricting access to the deduction, the government should have eliminated the small business deduction altogether as part of a broader tax reform and simplification effort.

Regarding U.S. tax reform, we were disappointed that Budget 2018 did not address Canada’s serious competitiveness challenges. The U.S. now enjoys a Marginal Effective Tax Rate (METR) of 18.8 per cent, down from 34.6 per cent, and below Canada’s METR of 20.3 per cent. The relative tax advantage that Canada has enjoyed over the United States for more than a decade has been eliminated.

In a recent survey of 90 Business Council members, nearly two-thirds indicated that U.S. tax reform will definitely or probably influence their company’s future investment plans. Three-quarters of those surveyed are concerned or very concerned about the competitiveness of Canada’s business environment. This is an alarming finding at a time when direct investment in Canada has fallen to an eight year low.

Now is the time to act on the advice of the federal Advisory Council on Economic Growth, which in its final report called for a review of the tax system by an independent panel of experts. In the Advisory Council’s own words, such a panel should “consider changes to corporate and personal tax rates, the balance between types of taxes, and the use of tax instruments designed to support investment.”

Before I conclude I would like to comment on the fiscal outlook. We remain concerned with the government’s failure to set out a clear path to balance over the medium term. Between 2017 and 2023, the government expects to add nearly $100 billion to the federal debt, bringing it to almost three-quarters of a trillion dollars. Over the same period, the interest on the public debt is expected to grow by 36 per cent, more than double the growth rate of direct program spending.

While we share the government’s view that targeted investments in infrastructure and innovation create a foundation for long-term economic growth, we also know from experience that rising public deficits and debt only serve to undermine consumer and business confidence, with negative consequences for business growth and job creation.

Thank you for the opportunity to address your Committee.


Be the first to comment

Please check your e-mail for a link to activate your account.
SUBSCRIBE TO OUR NEWSLETTERS
 
SEARCH
PODCAST

Positioning Canada in a Shifting International Order: Canada's Energy Future

July 16, 2018

On today's Global Exchange Podcast, we continue our series on positioning Canada in a shifting international order. Today's episode, recorded during our May 8th foreign policy conference in Ottawa, has Monica Gattinger, Michael Cleland, and Ian Brodie in conversation with CGAI President Kelly Ogle on the future of Canada as a major energy producer and exporter.



IN THE MEDIA

IHS Markit sees Canadian oil sands growth moderating after 2019

by Karan Nagarkatti (feat. Kevin Birn), Reuters, July 17, 2018

Longshot oil riches draw wildcatters to the Utah desert

by Catherine Traywick (feat. Kevin Birn), BNN Bloomberg, July 17, 2018


LATEST TWEETS

HEAD OFFICE
Canadian Global Affairs Institute
Suite 1800, 421-7th Avenue SW
Calgary, Alberta, Canada T2P 4K9

 

OTTAWA OFFICE
Canadian Global Affairs Institute
8 York Street, 2nd Floor
Ottawa, Ontario, Canada K1N 5S6

 

Phone: (613) 288-2529
Email: contact@cgai.ca
Web: cgai.ca

 

Making sense of our complex world.
Déchiffrer la complexité de notre monde.

 

© 2002-2018 Canadian Global Affairs Institute
Charitable Registration No. 87982 7913 RR0001

 


Sign in with Facebook | Sign in with Twitter | Sign in with Email