The federal government delivered a Fall Economic Statement this week. These Statements have morphed into ‘mini budgets’ full of pricey ‘goodies’ that used to be reserved for full budgets. Minister Freeland and the government are clearly preparing for challenging times next year and presented a “downside scenario” if growth continues to slow. In that eventuality, will we see less spending?
Some highlights from Thursday’s mini budget included:
- Up to 30% refundable tax credit for capital investments in low carbon energy generation and technology
- 2% corporate tax on the net value of share buybacks of public corporations starting in 2024
- The government’s intention to reduce credit card transaction fees for small businesses, either through a negotiated agreement with industry or legislation if an agreement cannot be reached. This reduction in fees will not “adversely affect other businesses” and will protect “existing reward points” for consumers
- Cancellation of interest on Canada Student Loans and Canada Apprentice Loans
- Advance payments on the Canada Workers Benefit
- $250M over five years to help workers prepare and retrain for green energy jobs, including a sustainable jobs training centre
- Launching a consultation on digital currencies, including crypto, stablecoins and central bank digital currencies
- A new Tax-Free First Home Savings Account, which would give prospective first-time home buyers the ability to save up to $40,000 tax-free
- Doubling the First-Time Home Buyers’ Tax Credit, which would provide up to $1,500 in direct support to home buyers
- A new, refundable Multigenerational Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite for a family member who is a senior or an adult with a disability
- Ensuring that profits from flipping properties held for less than 12 months are fully taxed
The government has good intentions behind its efforts to help first time home buyers, but its real impact is debatable. There are already several savings vehicles for first-time home buyers and a $1,500 tax break is a drop in the bucket. There are several ideas out there to make the construction of rental housing more realistic but none of those ideas appear to have made it into the mini budget.
While Ministers were actively promoting these housing related initiatives and the business press was quickly criticizing some of the corporate tax proposals, it is the measures on the energy file that could be most consequential. And, it’s all around nuclear power. The implicit recognition that only nuclear (and hydro) power can provide the needed baseload power for a shift to an EV transportation network is significant.
Following up on a recent announcement at Ontario’s Darlington power station where the federal Infrastructure Bank committed $970M to the construction of Canada’s first small modular nuclear reactor (SMR), Minister Freeland included SMRs in the list of power sources eligible for an investment tax credit of up to 30%. She is also launching a consultation process related to additional clean technologies including large scale nuclear power generators. In addition, the federal government allocated up to $1.28 Billion over six years to the Impact Assessment Agency of Canada and the Canadian Nuclear Safety Commission to increase their capacity and improve the efficiency of assessments.
In a political world where policies are often defined by social media posts on the left and right, budget making offers an opportunity to think about policy in full paragraphs. And, on a number of fronts the government took advantage of this opportunity. But in a post pandemic world with escalating interest rates and inflation; wars in Ukraine and Africa; energy shortages and threats to the environment; and, a medical system that is teetering, maybe Canadians can look forward to more substantive policy direction in the full budget.
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