November 9th, 2015
Ontario is the leading provincial contributor to the Canadian economy, but the province does not receive proportional allocations of government funding for business. As of 2012, the FedDev Ontario budget was $17.61 million on a per capita basis, compared to the $37.16 per capita budget of the FedDev Ontario equivalent, Canada Economic Development for Quebec Regions. An even distribution of funding would help ensure that businesses and communities across the region receive equal support, but such a promise was not a feature of any of the three major parties.
While Kathleen Wynne remains the province’s Premier, a new shift in federal leadership now has the Liberals on top across the board. It is up to the 80 Liberal representatives from Ontario to follow through on their campaign promises for Canada’s economic future. This is no easy task, with significant challenges from global markets, investors, and talent. Add Canada’s current economic downturn to the mix and the Liberals have their work cut out for them. Are they up to the challenge?
The Liberal platform
The current Liberal commitment to economic development outlines a plan to reduce business tax from 11% to 9% by 2019. They also plan to reduce employer EI premiums from $1.88 to $1.65 per hundred dollars by 2017. Doing so will help reduce the costs of conducting business in Ontario while strengthening the business climate. The Liberals also plan to waive EI premiums for young people applying for jobs over the next three years. Doing so helps support a sector of the Ontario population that would benefit from a jumpstart into the economy.
While the Liberals strategically campaigned against Canadians in the wealthy 1%, their pledge on corporate income tax at 15% matches that of the former Conservative government.
Several areas of the Liberal plan resonate well within the Ontario business community, such as the increase in federal infrastructure investment from $65 billion to almost $125 billion over the next ten years. The province’s transit and core infrastructures are in dire need of an overhaul, which such an investment would certainly provide. The Liberal promise to maintain the popular Canada Job Grant provides a yearly contribution of half a billion dollars in government funding for skills training, distributed to the provinces and territories.
Challenges for the years to come
There are some areas for concern, however: the Liberals have committed to ensure businesses do not use the Canadian-Controlled Private Corporation (CCPC) to lower personal income tax obligations for high-income earners rather than supporting its intended audience of small businesses. Granted, the system should weed out businesses abusing this tax break. With this said, Justin Trudeau’s exact stance on the matter remains unclear. His opinion requires clarification to put small business owners at ease that they are receiving fair treatment and consideration, and that this move’s design will not jeopardize small business owner’s access to this deduction.
The Liberal plan to run a “modest short term deficit” of $10 billion for the next three years is also troubling. The current federal debt to GDP ratio sits around 32%, and annual interest payments on the $660 billion federal debt currently stand at $30 billion a year. By pushing infrastructure investment, this plan seeks to jumpstart economic growth across the country. Will it be a success? The Liberals have an ambitious plan to lift Canada from a recession: only time will tell if their new economic environment will prove a success or a failure.
Regardless of the current government’s stance, our team at INAC services can help your business receive the government funding it deserves. Get in touch with us today, and we can identify the best funding initiatives that can help your business succeed.