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Budget provides boost for manufacturers, helps sustain economic recovery: CME


The extension of the two-year write-off for manufacturing and processing technologies announced in today’s federal budget is critical to sustaining Canada’s economic recovery, according to Canadian Manufacturers & Exporters (CME).

The two-year depreciation rate for investments in industrial machinery was set to expire at the end of this year. While the spring election put the future of an extension in jeopardy, the budget ensures businesses will be able to take advantage of the investment incentive for an additional two years.

“Canadians can no longer borrow their way out of recession,” explains CME president and CEO Jayson Myers. “As the government now looks for opportunities to save money, we have to rely more than ever on business investment, innovation, improved productivity and export growth to sustain Canada’s economic recovery, and generate the incomes and public services that Canadians expect.”

The accelerated rate of depreciation will save Canadian manufacturers approximately $650 million over the next five years. CME continues to advocate for this measure to become a permanent part of Canada’s tax system.

“We need an internationally competitive business environment to support our manufacturers and exporters,” Myers says. “The accelerated write-off combined with corporate tax cuts helps enormously on the tax side, but we need to do more to eliminate unnecessary regulatory impediments to growth, facilitate exports into the United States and other markets around the world, and leverage publicly-funded research to develop the solutions that will enable Canadian businesses to compete and grow.

“It’s no longer enough to be good — we need to be the best.”

CME recently released an eight-point plan for a more competitive Canada:

  1. Lower taxes on those businesses that are investing in new products, new technologies, and the skills of their employees. Maintain currently legislated targets for reducing corporate tax rates. They will help 120,000 businesses, large and small alike, to invest, create new jobs, and grow.
  2. Extend the two-year straight-line depreciation for investments in manufacturing and processing machinery and equipment. The Accelerated Capital Cost Allowance encourages companies to invest in technologies that are essential in improving productivity and environmental management.
  3. Encourage innovation and the commercialization of new products and technologies. Canada’s Scientific Research and Experimental Development tax credit should be fully refundable and the processes for application and approval should be simplified. Tax credits should be considered to encourage workplace training, new market development, and improvements in productivity, energy efficiency, and environmental management. Better ways to transfer knowledge from research labs to businesses need to be found.
  4. Help businesses develop and take advantage of international opportunities. We need to fight protectionism and negotiate meaningful market access, investment protection, and tax agreements with other countries, and particularly with Europe, India, and Latin America. We need a clear and coherent strategy to improve business relations with China. And, we need to effectively enforce our trade rules.
  5. Enhance the competitiveness of North America’s integrated supply chains. We need to accelerate efforts aimed at streamlining regulatory requirements at the Canada-US border and improving external security. We also need to find ways of minimizing regulatory differences across Canada as well as with our largest trading partner, the United States.
  6. Improve the quality and availability of skilled workers. We need to increase support for applied skills, trades, and technology programs in Canada’s school and college systems and make it easier for business visitors and skilled immigrants to enter, work, and stay in Canada.
  7. Strengthen Canada’s energy and logistics infrastructure. We need to ensure that Canadian households and businesses have access to secure, stable and cost competitive energy. We need to build the energy transmission, transportation, and communications infrastructure necessary to enable global commerce.
  8. Improve regulatory efficiency. We need to modernize legislation, eliminate unnecessary regulatory differences, simplify compliance requirements, streamline regulatory decision-making on the part of government, and ensure effective enforcement of evidence-based regulations.

www.cme-mec.ca