28 February 2018 0 Comments Posted By : Francine Kopun

Federal budget fails to help Canadian businesses stay competitive, critics charge

Canadian businesses are at a growing tax disadvantage vis-à-vis their U.S. counterparts and Tuesday’s federal budget did nothing to improve the situation, according to business leaders.

“A big worry is what wasn’t in the budget — and that is anything to improve Canada’s competitiveness relative to the United States on the tax reform front,” said Dan Kelly, president, chief executive officer and chair of the Canadian Federation of Independent Business.

“We knew they weren’t going to do anything major there, but we were hoping that they might have started some form of a deduction for capital investments, as has happened in the U.S.”

Recent tax cuts in the U.S. have poured billions of dollars into corporate coffers, putting businesses in a position to spend more money on wages, new technology or other capital upgrades.

Across the border, small business owners can deduct up to $1 million (U.S.) in capital or technology improvements in the year they are made, said Kelly. He said Canadian companies can claim only a fraction of that.

“As a small-business owner, your U.S. competitor is going to experience a much lighter tax touch than you will, and obviously, if you’re trying to compete, especially with the NAFTA uncertainty, that is not a good thing,” Kelly said.

John Manley, president and chief executive officer of the Business Council of Canada, also expressed disappointment with Finance Minister Bill Morneau’s budget.

“I don’t think anyone expected the minister to rewrite the tax code overnight,” Manley said in a statement.

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