Canada’s business leaders are urging Finance Minister Chrystia Freeland to table an early budget in 2023 to provide clarity on promised tax measures aimed at promoting growth that were highlighted in this month’s fall economic update.
Goldy Hyder, Business Council of Canada CEO, wrote to the minister this week urging her to table the budget “at the earliest opportunity” and ideally no later than the end of February.
“During the pandemic, you tabled two budgets in late April. I hope you will agree that Canadian investors and workers cannot afford to wait until April, 2023, for details of the government’s plans to improve productivity, competitiveness and economic growth,” he wrote.
“Moreover, the federal government has set aggressive targets for the green-energy transition, which require immediate action. Any delay in the budget cycle will make it harder for Canadians to achieve them,” he added.
In releasing her fall economic update, Ms. Freeland said she and her government colleagues were “keeping our powder dry” as they assess whether the risks of a 2023 recession materialize. The update itself made several references to new business-focused policies that would be further detailed in the 2023 budget, yet to be scheduled.
Mr. Hyder’s letter points out that over the past 30 years, 18 federal budgets were tabled in February and another five were introduced before the end of March.
“Inflation, higher interest rates and a looming global slowdown have combined to make this a challenging time for many Canadians. Hence the need for a full budget at the earliest opportunity. In effect, we are proposing a return to the federal government’s traditional budget cycle,” he wrote.
The fall update included nearly a dozen references to specific business-related policies that will be further explained in the 2023 budget. It also broadly stated the budget will contain “significant further measures” related to boosting investment and productivity.
Some of the specific references include Canada’s plans for responding to a host of new green-energy investment incentives being offered to U.S. companies after the adoption of President Joe Biden’s Inflation Reduction Act earlier this year.
The update said a new $6.7-billion investment tax credit for clean technologies would include incentives related to labour conditions. Meeting the yet-to-be-defined labour standards would entitle investors to the full 30-per-cent credit, while those that do not would only be eligible for a 20-per-cent credit. The update said details related to labour conditions “will be announced in Budget 2023.”
Similar language related to further details in the budget were included in sections discussing an investment tax credit for clean hydrogen and efforts to attract private investment toward a net-zero-emission economy.
Canada’s business community is also interested in the update’s pledge to launch a national supply chain strategy – another item in which the government said details will be provided in the budget.
Other business-related issues that the update said will be explained in the budget include a review of the Scientific Research and Experimental Development tax credit and a planned new 2-per-cent tax on share buybacks that would take effect in 2024.
While not part of Mr. Hyder’s letter, opposition MPs have long called for the government to release budgets earlier in the year over accountability concerns. When budgets are released in April, after the fiscal year has started, the announced measures are not included in a wide range of reports to Parliament related to government spending.
In response to a request for comment, Ms. Freeland’s spokesperson, Adrienne Vaupshas, did not directly address the letter or the timing of the 2023 budget. She said in an e-mail that the measures announced in the update “and the ones we will continue to make” will be crucial to the Canadian economy.