“It seems as though the budget no longer stands as a tool for promoting and encouraging growth, but instead is about pushing social justice issues in a way that appeals to the voting population,” he said.
For example, Finance Minister Bill Morneau announced pay equity legislation plus $3 million over five years for “pay transparency” to narrow the wage gap among federal workers and those who work in federally regulated sectors of the economy. That’s expected to have an impact on about 1.2 million Canadians.
Morneau also announced that an advisory council will be created to examine how best to establish a national drug program.
“While I – along with most Canadians, I’m sure – agree with the idea of creating a more equitable Canada for all citizens, I don’t believe that this should be cause for grandstanding by the federal government in an attempt to cover up a number of egregious mistakes made over the past year,” Stone said.
Stone also expressed concern about the projected federal deficit.
The budget projects an $18.1 billion deficit, including a $3 billion “risk adjustment.” However, that’s lower than last year’s $19.3 billion figure.
Morneau said the federal budget deficit is expected to gradually decline over the coming years to $12.3 billion by 2022-23.
“Again, I’m certain that most Canadians would agree that striving towards an economy of equal opportunity for all members of society is preferable,” Stone said.
“However, given the current economic climate and the potential for significant economic roadblocks down the road — a topic discussed all too briefly in my opinion — Canadians would likely be better served by non-experimental policy adjustments in the name of obtaining votes.”
Stone said he’s also disappointed that in his opinion, there’s little in the federal budget to make Canadian businesses more competitive in the “global theatre.”
“The United States has taken an aggressive approach towards attracting business investment to the point where they have become a very attractive location to start or house a business,” Stone said.
“Meanwhile, Canada has done quite the opposite. If a lower corporate tax rate wasn’t enough to tip the scales in favour of investing in the United States, the simple fact that our government is allowing a province to prevent a company from investing hundreds of millions of dollars in our country likely is.”
Stone also said in his opinion, the budget “does little to address the potential threats facing the Canadian economy; namely the ongoing NAFTA (North American Free Trade Agreement) negotiations and the potential for rising rates.
“This alone is cause for serious concern,” he added.
Fear has been expressed by observers that the U.S. could walk away from negotiations now underway to modernize that agreement, first struck in the early 1990s, thereby possibly jeopardizing trade with many U.S. firms and costing many Canadian jobs.
The budget does allocate $191 million over five years to support the softwood lumber industry, including litigation under the World Trade Organization and utilizing NAFTA’s dispute resolution mechanism.
Stone did find one segment of the budget which he described as “slightly positive.”
“The government seems to have listened to small- and medium-sized businesses and has since backed down on the legislation proposed earlier,” he said.
Last summer the federal government floated proposed tax changes which it said were meant to ensure the rich paid their fair share of taxes.
During a meeting in Olds, critics said those changes were a money grab and would primarily hurt small- and medium-sized businesses.
Examples of the proposed changes include:
Income sprinkling, whereby a business owner pays family members a salary or dividend in order to cut the business’s tax burden.
Passive investment retention, under which a business owner invests income for reasons other than immediate reinvestment into the business. According to some concerned business people and lawyers, that can include taking income from the business as a source of retirement income.
In last week’s federal budget, the federal government announced it would gradually eliminate the amount eligible for the preferential small business rate as the amount of passive income rises above $50,000. The small business deduction limit would fall to zero at the $150,000 level.
The federal government will also work toward limiting the advantages that some businesses can claim when they pay certain dividends.
It’s expected that the changes, slated to be implemented in 2019, will bring $925 million a year into federal government coffers by the 2022-23 fiscal year.
The federal government will also work toward limiting the advantages that some businesses can obtain when they pay certain dividends.
“What’s sad is that we are now considering a somewhat successful resistance against predatory tax changes (to be) a victory,” Stone said. “With that said, some small businesses will still pay more as a result of the changes that did make it through.”
“It seems as though the budget no longer stands as a tool for promoting and encouraging growth, but instead is about pushing social justice issues in a way that appeals to the voting population.”
OLDS & DISTRICT CHAMBER OF COMMERCE