Today, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, released the 2022 Fall Economic Statement.
“It is clear that the economy and financial conditions have continued to deteriorate, as evidenced in the statement,” said Anita Huberman, President & CEO, Surrey Board of Trade. “We need to look at a comprehensive overview of Canada’s taxation measures to ensure that businesses can be sustained and weather through what could possibly be an economic storm in 2023. Creating efficiencies in the tax system will undoubtedly free up revenue, cut costs, and enhance profitability.”
Announcement details include:
1. Lowering credit card transaction fees for small businesses.
2. Investment tax credit for clean technologies.
3. 2% tax on share buybacks.
4. Student and apprentice loans permanently interest free.
5. Federal revenue for the current fiscal year will be $445.9-billion – an 8% increase over the previous year. Program expenses will be $437.8-billion, a nearly 7% decrease.
6. Real GDP growth is projected to be near 1% as of the September 2022 survey but can be as low as -1% as forecasted in the downside scenario.
7. Federal deficit for this fiscal year will be $36.4-billion.
8. Baseline scenario projects a $4.5-billion surplus by 2027-28.
9. Downside scenario projects a recession in 2023
1. Lowering Credit Card Transaction Fees for Small Businesses
The Federal Government will enter into negotiations with the credit card industry, and with businesses, to find a way to lower transaction costs for businesses. If this does not lead to a negotiated outcome, there will be a move to regulate credit transaction fees in the new year.
2. Response to the Inflation Reduction Act (clean tech investments)
In light of the passing of the Inflation Reduction Act in the United States, the following was announced to enhance Canada’s competitiveness:
A. Investment Tax Credit for Clean Technologies proposes a refundable tax credit equal up to 30% of the capital cost of investments in Electricity Generation Systems and Industrial zero-emission vehicles.
B. The Investment Tax Credit for Clean Hydrogen launches consultations on how best to implement an investment tax credit for clean hydrogen. The US Inflation Reduction Act invested heavily in clean hydrogen, introducing carbon intensity tiers to guide the level of investment. This is a system that the Finance Ministry is considering.
3. Sustainable JobsAn outline of the design, operations and investment strategy of the Canada Growth Fund, initially announced in Budget 2022.
4. Launching a Canadian Innovation and Investment AgencyA launch of the Innovation and Investment Agency, which will help some of Canada’s most innovative companies scale up, commercialize, grow, and create jobs in a changing global economy.
5. Budget Projections for Canada