By Anthony Capkun
January 29, 2018 – While Ottawa continues to fumble and stumble, bringing us ever closer to the brink of falling off the world stage altogether, a coalition of Canadian manufacturers is trying to do what it can to keep that from happening.
In a letter to Bill Morneau, the Canadian Manufacturing Coalition notes capital investment and foreign direct investment have fallen, resulting in weakened productivity and global competitiveness, and fewer innovations.
The letter suggests several measures for boosting investment and growth, including:
• Reducing federal and provincial general corporate taxes to a combined 20%.
• Expanding and improving the Accelerated Capital Cost Allowance (ACCA) depreciation rules to mirror new U.S rules.
• Introducing an Investment Tax Credit on purchases of new equipment and software of between 10% and 15% to help companies, especially SMEs, improve cash flow and offset the impact of the low Canadian dollar on the cost of buying foreign machinery and equipment.
• Introducing a “patent box” innovation support that would reduce taxes on profits from new products and product mandates, similar to Quebec and Saskatchewan.
• Lowering the top marginal personal income tax rate from 33% to 31% to help attract and retain talent. “We are concerned that a growing income tax gap between Canada and the U.S. will trigger a return to the Brain Drain challenge that plagued the Canadian economy in the 1990s,” says the coalition.
• Reforming the Scientific Research & Experimental Development (SRED) program to lower the administrative burden and support a broader range of corporate innovation needs.
“[The] U.S. is out-competing Canada for new direct investment,” says the coalition. “With the U.S. passing massive tax reform legislation to reduce the overall corporate and personal tax burden and spur investment, innovation and growth, Canada needs to respond to reverse these investment trends and leverage the sector for broader economic growth across the country.”
Whereas many of us may think China is wholly responsible for taking away Canadian jobs, we need only look southward to gaze upon the latest threat. We must push our elected officials to change course and stimulate our manufacturing sector.
* To read the whole letter to Bill Morneau, download the PDF below.
* This column also appears in the upcoming February 2018 edition of Electrical Business Magazine.