ZCZC
BCN-05
CANADA-ECONOMY-BUDGET-GOVERNMEN
Canada goes deeper into debt to compete with Trump tax cuts
OTTAWA, Nov 22, 2018 (BSS/AFP) – In a fiscal update Wednesday Canada’s
finance minister ditched a promise to balance the budget next year, and
instead rolled out measures to help companies compete with the United States.
The delivery of Can$17.6 billion (US$13.3 billion) in new spending and
forgone revenue over six years comes after US President Donald Trump brought
in massive US corporate tax cuts that have taken a bite out of investment in
Canada.
The Canadian measures include accelerated capital cost allowances and more
tax write-offs of equipment and machinery to encourage businesses to invest
in Canada, sooner.
The government also pledged to build additional port and rail
infrastructure to get more goods to Atlantic and Pacific ports and tap new
overseas markets in an attempt to diversify trade.
Nearly 80 percent of Canada’s current trade is with its US neighbor.
The government also offered a hand to struggling Canadian media by
allowing non-profit news organizations to apply for charitable tax status,
and providing tax credits to newsrooms that expand local coverage as well as
to Canadians who buy digital newspaper subscriptions.
Opposition parties spent the day hammering Prime Minister Justin Trudeau
for breaking his balanced budget promise.
Trudeau had vowed in the 2015 election campaign to post small budget
deficits of about Can$10 billion per year, before returning to balance in
2019 when he will again face the electorate.
In a speech to parliament, Finance Minister Bill Morneau said dealing with
“a new administration in the United States” has posed “some interesting
challenges.”
“The current (US) administration has moved forward with an aggressive
package of tax cuts for large corporations,” he noted.
“Some have lobbied us to match those measures,” he said. “If we were to do
that, it would add tens of billions in new debt (and) it would do more to
worsen income inequality in Canada than improve it.”
In his fiscal update, growth was forecast to slow to 2.0 percent in 2018
and 2019, while the government plans to continue posting deficits of more
than Can$10 billion through to 2023-24.
It was estimated in Morneau’s February budget at Can$18.1 billion this
year.
In the update, higher spending (Can$344.1 billion) was forecast to outpace
a boost in revenues (Can$328.9 billion), but the deficit was expected to
remain unchanged.
Meanwhile the revised federal debt was predicted to rise to Can$687.7
billion or 30.9 percent of the economy this year.
BSS/AFP/HR/0920