(Nov. 22/18) In his fall fiscal update, delivered on Nov. 21, Finance Minister Bill Morneau explained that while Canada’s economy continues to grow, the federal government will need to increase its deficit in 2019 to combat competitiveness challenges from the United States.
New measures over the next six years will cost the federal treasury $17.6 billion, with a large portion of that spending to take place during the 2019-20 fiscal year. Most of this spending is meant to promote investment in Canada and mitigate the impacts of recently announced U.S. corporate tax cuts.
As a result, Ottawa is projecting a deficit of $18.1 billion for 2018-19, and the deficit next year is expected to be $19.6 billion — not $17.8 billion as previously projected. Federal deficits are not expected to decline until 2021-22.
While the government is focusing its increase in spending on the manufacturing sector (which has been identified as an “innovation sweet spot”), Restaurants Canada noted several victories among the announcements from the fall fiscal update, based on recommendations that the association made in a pre-budget submission for 2019-20.
• allowing faster write-offs for leasehold improvements for tax purposes; and
• a new accelerated capital cost allowance to encourage businesses of all sizes, across all sectors, to invest in assets that can drive long-term growth, by allowing them to deduct the costs of those investments sooner.
Additional good news from the fall fiscal update include commitments from the federal government to:
• remove barriers to trade within Canada by working with the provinces and territories to enable businesses to transport goods more easily;
• harmonize food regulations and inspections;
• align regulations in the construction sector (including the harmonization of building codes across Canada); and
• facilitate greater trade in alcohol between the provinces and territories.
The fall fiscal update also represents an encouraging first step from the federal government in response to ongoing advocacy from Restaurants Canada to lessen the administrative and regulatory burden that challenges Canadian businesses. The Liberals have indicated their intention to reform and modernize federal regulations, and encourage the consideration of economic competitiveness when designing and implementing regulations going forward.
If you have any questions or concerns, you can reach out to Lauren van den Berg, Restaurants Canada National Vice President, Government Affairs, at Lauren@restaurantscanada.org or David Lefebvre, Restaurants Canada Vice President, Federal and Quebec, at DLefebvre@restaurantscanada.org.