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Budget Scorecard and Infographic 

Amid continued global financial and economic instability and slow economic growth in Canada, Finance Minister Jim Flaherty is proceeding with caution by tabling an essentially “stay-the-course” budget plan.

Leading up to the 2013 budget plan, CGA-Canada made a number of key recommendations to the federal government in the areas of government finances, taxation, skills and training, as well as growth and innovation.

Here is how Budget 2013 measures up from CGA-Canada’s perspective:


GOVERNMENT FINANCES

CGA-Canada Proposals

2013 Budget

Deliver assurances that the target date to eliminate the deficit is realistic, achievable and on track.

The government is on track to return to balanced budgets by 2015-16. The deficit is projected to decline in every year until a surplus of $0.8 billion is reached in 2015-16. A surplus of $5.1 billion is projected for 2017-18.

Provide details about the plan to further reduce public sector expenditures.

The government’s plan will produce an additional $500 million in savings in 2013-14, rising to $2.3 billion in 2017-18 for a total of $8.4 billion over the next five years. This savings will be generated by continuing to control direct government spending and improving the integrity of the tax system.

Enable government processes to be more open and transparent.

No specific measures outlined.

Comments

The federal government is standing firm on its commitment to balance the budget before Canadians go to the polls in 2015. This may be challenging given that the economy is sluggish, which will affect government revenues. On top of the savings outlined in Budget 2012, this year’s budget is proposing further belt-tightening in some areas and shuffling existing spending to priority areas. But will this be enough to bring the books back in the black?

In addition, the current administration has been criticized for its unwillingness to make financial information more accessible and transparent to parliamentarians and the public. Hopefully, as parliamentarians turn their attention toward the budget and budget implementation legislation, they will have the tools and information to engage with the public at a substantive level and to make well-informed decisions.

Grade:

TOP ]

TAXATION

CGA-Canada Proposals

2013 Budget

Modernize Canada’s tax system to ensure fairness for taxpayers and preserve government revenues.

The 2013 Budget Plan takes steps in the following areas:

  • Closing some tax loopholes
  • Addressing aggressive tax planning
  • Clarifying tax rules
  • Combatting international tax evasion and aggressive tax avoidance
  • Strengthening compliance
Appoint an independent panel of experts to chart a course to simplify Canada’s tax regime. No action taken.
Implement a sunset mechanism for unlegislated tax proposals. No action taken.
Avoid the introduction of any further targeted tax credits. While the enhanced Adoption Expense Tax Credit and the new temporary First-Time Donor’s Super Credit will assist some Canadians, these new credits will add to the growing list of tax expenditures that are generally found to be inefficient from an economic perspective.
Simplify the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program. The 2013 Budget Plan provides the Canada Revenue Agency with $20 million in new funding over two years to improve the predictability and enhance enforcement of the SR&ED Tax Incentive Program.
Support Canada’s manufacturing sector by extending the accelerated capital cost allowance.

In view of the significant place the manufacturing sector occupies in the Canadian economy, the 2013 Budget Plan invests in a number of strategic measures to strengthen these vital industries. This includes a two-year extension of the temporary accelerated capital cost allowance for new investment in machinery and equipment in the manufacturing and processing sector.

Support small business owners. $110 million over five years by increasing the Lifetime Capital Gains Exemption to $800,000 and indexing the new limit to inflation for subsequent years.
Comments

While the federal government is taking steps to ensure taxes are fairer, it is disappointing that no action is being taken to ensure taxes are simpler.

By closing more loopholes that allow some taxpayers to avoid paying their fair share of taxes, the budget is addressing one of the recommendations made by the Commons finance committee in its December 2012 pre-budget report.

At the same time however, the budget is silent on the Finance committee’s call for the federal government to explore ways to simplify the Income Tax Act (ITA) in order to reduce complexities and inefficiencies. For the last two years, the Finance committee has recommended that a public consultation process be launched to undertake a comprehensive review of the ITA to modernize and simplify the tax system – either through the creation of an expert panel or the establishment of a royal commission.

There is a growing consensus that Canada’s tax system has become unnecessarily complicated, and if Canada is to remain competitive, attract business and investment, and create jobs and economic growth – this complexity must be addressed. Moreover, according to some estimates, tax simplification could yield savings of almost $6 billion annually.

Tax reform should be a key priority for this government.
Grade: TOP ]

SKILLS AND TRAINING

CGA-Canada Proposals

2013 Budget

Address labour market gaps or mismatches through skills training.

The 2013 Budget Plan aims to connect Canadians with available jobs by:

  • Creating the Canada Job Grant to transform the $500 million-per-year Labour Market Agreements in 2014-15.
  • Creating opportunities for apprentices to complete their training, and encourage mobility across the country.
  • Providing support to groups that are underrepresented in the job market such as persons with disabilities, youth, Aboriginal peoples and newcomers.
Commit to a national strategy on entrepreneurship. In addition to proposals to promote an entrepreneurial culture in Canada and support youth entrepreneurship, the 2013 Budget Plan supports small business by providing $225 million to expand and extend the temporary Hiring Credit for Small Business for one year.
Comments

The 2013 federal budget plan deserves high marks for its focus on skills and training. The federal government will improve access to skills and training to achieve better results.

Canada is experiencing a significant skills gap or mismatch, with workers unable to find jobs and employers unable to find workers with the right skill set – often within the same geographic regions.

CGA-Canada welcomes the measures being directed towards increasing the labour market success of under-utilized segments of the population, including youth, immigrants, people with disabilities, and Aboriginals. Small businesses in Canada will also appreciate the expansion and extension of the temporary Hiring Credit for Small Business for another year.

Grade: TOP ]

GROWTH AND INNOVATION

CGA-Canada Proposals

2013 Budget

Promote diversified international trade.

The government will continue with its agenda to grow trade and investment opportunities, with a focus on achieving major new free trade deals with the European Union, India and Japan.

Support research and innovation.

The 2013 Budget Plan proposes to:

  • Support advanced research
  • Invest in business innovation
  • Enhance Canada’s venture capital system

The federal government also intends to promote an entrepreneurial culture in Canada through new Entrepreneurship Awards that celebrate the achievements, mentorship, risk-taking and resilience of Canadian entrepreneurs.

In addition, the 2013 Budget Plan proposes to provide $18 million over two years to the Canadian Youth Business Foundation.

Invest in rebuilding Canada’s infrastructure.

The 2013 Budget Plan delivers a $53 billion Building Canada plan to support local and economic infrastructure projects over 10 years, beginning in 2014-15.

Comments

A new infrastructure deal to modernize Canada’s crumbling infrastructure is another high point in the 2013 federal budget – helping to pave the way towards a more competitive and prosperous Canada. However, the positive effects of the new Building Canada plan will not be known until further down the road, as the new plan does not begin until 2014-15.

It would appear that Minister Flaherty has made the most of the limited amount of funding available in these times of fiscal restraint, and made some wise investments in growth, research and innovation.

Grade: TOP ]

Related Information

Federal Budget 2013 Scorecard Infographic

CGA-Canada | Last Updated: March 21, 2013