Liberals not cutting corporate tax, instead reveal $16B plan to boost competitiveness with U.S.

Canada

OTTAWA – The federal Liberals have come up with a $16-billion answer to Canada’s competitiveness concerns.

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Ottawa’s long-awaited plan to help Canada compete with the United States for investment dollars is the centrepiece of its fall economic statement – which forecasts slightly deeper annual deficits over the coming years.

Finance Minister Bill Morneau had faced pressure to lower the corporate tax rate in response to major tax and regulatory reforms in the U.S. – but instead, in today’s economic update he chose to use billions worth of extra federal fiscal space to offer tax incentives for businesses who invest in Canada.

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By far, the biggest-ticket items among the proposed tax measures are changes that would enable businesses to immediately write off the full cost of some types of machinery and equipment, and allow companies of all sizes and in all sectors to expense a larger share of newly acquired assets.

A stronger economy has given the government about $22 billion in extra fiscal room over the coming years – but the new adjustments will also contribute to slightly larger-than-expected annual shortfalls, starting next year.

Morneau’s fall economic statement also proposes additional support for the country’s struggling journalism industry, sets up a new fund for social finance, and gives a boost to Nutrition North.

— More coming.

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