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Budget Scorecard 

As Canada enters the next phase of economic recovery, CGA-Canada provides a number of recommendations to the federal government on priorities going forward in the areas of fiscal prudence, taxation, support to SMEs and entrepreneurs, as well as meeting tomorrow’s challenges today.

Here is how Budget 2011 measures up from CGA-Canada’s perspective:


FISCAL PRUDENCE AND EXPENDITURE

CGA-Canada Proposals

2011 Budget

Provide an update on the plan to eliminate the deficit, reduce the debt and control public sector expenditures.
  • The government’s plan for returning to balanced budgets is on track.
    • Continue with 2010 plan to restrain growth in spending by $17.6 billion over five years.
    • Launch a comprehensive one-year Strategic and Operating Review aimed at improving the efficiency and effectiveness of government operations and programs.
    • Return to balanced budgets by 2015-16 at the latest.
  • The expiration of stimulus measures and the savings measures announced in this budget are expected to lower program spending from 16.0 per cent of gross domestic product (GDP) in 2009-10 to 12.9 per cent of GDP in 2015-16, in line with its pre-recession level.
  • The federal debt is projected to decline to 29.7 per cent of GDP in 2015-16, broadly returning to its pre-recession level.
Comments

The global economy is still fragile and economic recovery is sluggish – countries around the world will need to proceed with caution.

As the stimulus program comes to an end, it is incumbent on governments everywhere to turn to the challenging task of strengthening public finances. Canada may be in the enviable position of being at the head of the pack, but the government must strictly adhere to its commitment of fiscal sustainability and returning to balanced budgets over the medium term.

CGA-Canada is pleased the government is on track with it fiscal plan and is taking extra precaution through the new Strategic and Operating Review to meet its targets. This is key to restoring confidence and maintaining Canada’s position globally.

Grade: Pass. TOP ]

TAXATION

CGA-Canada Proposals

2011 Budget

Take concrete action to improve Canada’s tax system – make it fairer, simpler and more efficient.
  • Appoint a panel of experts to modernize Canada’s tax regime.
  • Implement a “sunset provision” for unlegislated tax proposals.

Budget 2011 announces a number of targeted tax measures for families and communities. But the government has taken no action to address tax reform.

Strengthen the commitment to taxpayer fairness, as promised in Budget 2010.
  • Introduce a taxpayer fairness code that includes the guaranteed right of Canadian taxpayers and businesses to receive written tax rulings.

    Budget 2011 proposes to:

    • Introduce – by April 2012 – written electronic answers to written queries from clients using the “My Business Account” interface.
    • Review the penalty structure for the late filing of information returns, with particular regard to its impact on small businesses. Any changes to the penalty structure as a result of this review will be announced in advance of the filing due date for the 2011 taxation year.
Comments

CGA-Canada welcomes the new measures to strengthen taxpayer fairness.

CGA-Canada also holds the position that a simple, transparent and fair tax system with low, internationally competitive rates is integral to the well-being and revival of the Canadian economy.

Now is the time to modernize Canada’s tax regime – to look beyond targeted taxes with short-term objectives. Some would argue targeted tax relief is neither efficient nor effective tax policy, and further complicates an already complex system.

Other industrialized countries are taking concrete measures to strengthen and simplify their taxation regimes – including the United States, the United Kingdom and Australia. Canada’s federal government missed a golden opportunity to launch an initiative to reform the tax system.

Grade: Needs improvement. TOP ]

SUPPORT SMEs AND ENTREPRENEURS

CGA-Canada Proposals

2011 Budget

Embrace the “Year of the Entrepreneur” by developing a National Entrepreneur Strategy with a focus on innovation.

Budget 2011 proposes to:

  • Provide a temporary Hiring Credit for Small Business of up to $1,000 against a small firm’s increase in its 2011 Employment Insurance premiums over those paid in 2010 to encourage additional hiring.
  • Extend the work-sharing program and the Targeted Initiative for Older Workers.
  • Extend the accelerated capital cost allowance treatment for investments in manufacturing and processing machinery and equipment for two years.
  • Provide $80 million in new funding over three years through the Industrial Research Assistance Program to assist small and medium size businesses accelerate their adoption of key information and communications technologies through collaborative projects with colleges.
Introduce mechanisms to facilitate improved access to financing, providing a needed boost to Canadian business.
  • Provide $20 million over two years to help the Canadian Youth Business Foundation to support young entrepreneurs.
  • Expand the temporary powers of Export Development Canada to provide financing support to Canadian exporters in the domestic market.
Put in place a moratorium on the net increase of new federal regulatory requirements while the Red Tape Reduction Commission and Advisory Committee on Small Business and Entrepreneurship conduct their specific reviews.
  • The government will move forward on federal regulatory requirements through the work of the Red Tape Reduction Commission, scheduled to report in the Fall of 2011.
    Comments

    Canada’s SME sector is the backbone of the economy – the engine of job creation and economic growth. Supporting this sector must be a top priority for the government’s economic recovery plan.

    CGA-Canada is pleased to see the federal government is making an effort to increase public awareness of the important role played by SMEs by declaring 2011 as the “Year of the Entrepreneur”, and supporting our vital SME sector through a few smart strategic measures in this year’s budget.

    Grade: Pass. TOP ]

    MEETING TOMORROW’S CHALLENGES TODAY

    CGA-Canada Proposals

    2011 Budget

    Act on recommendations made in the report by the Task Force on Financial literacy.

    Budget 2011 proposes to:

    • Appoint a Financial Literacy Leader to promote national efforts.
    • Provide $3 million per year, in addition to the $2 million per year already provided, to the Financial Consumer Agency of Canada, to undertake financial literacy initiatives.
    Work with the provinces and territories to reduce the pension income gap.
    • Enhance the Guaranteed Income Supplement (GIS) for those seniors who rely almost exclusively on their Old Age Security and the GIS and may be at risk of experiencing financial difficulties.
    • Continue work with provinces to enhance the Canada Pension Plan (CPP).
    Provide leadership and engage Canadians on long-term priorities, including:
    • Innovation and productivity
    • Skills and training
    • Aging demographics
    • Labour shortages
    • Sustainable social programs
    • Infrastructure.
    • Enhance and expand eligibility for the Canada Student Loan and Grant Program for part-time and full-time post-secondary students.
    • Provide up to $10 million a year in tax relief and Registered Education Savings Plan assistance to Canadian post-secondary students studying abroad.
    • Establish 10 new Canada Excellence Research Chairs, some of which will be active in fields relevant to Canada’s Digital Economy Strategy.
    • Increase the budgets of all three federal granting councils by $47 million annually.
    • Improve commercialization and support demonstration of new technologies in the marketplace by supporting research links among colleges, universities and businesses.
    • Legislate a permanent annual investment of $2 billion in the Gas Tax Fund to provide predictable, long-term infrastructure funding for municipalities.
    Comments

    As purse strings tighten, baby boomers retire, and social program costs continue to climb, Canada faces a multitude of long-term challenges that need to be discussed today.

    Canada needs a plan. Government needs to muster up the strength, vision and will to deal with and consult with Canadians on these matters of fundamental importance.

    Grade: Needs improvement. TOP ]

    CGA-Canada | Last Updated: March 22, 2011