The Conservative government tabled a balanced budget today that included some key measures aimed at small business and manufacturing.
Small businesses will see their tax rate fall from 11% to 9% by 2019, and manufacturers will benefit from an Accelerated Capital Cost Allowance (ACCA) that will allow businesses to write off new equipment faster.
The Canadian Federation of Independent Business, who had lobbied for the tax cut as well as several other measures included in the 2015 budget, gave the pre-election budget an ‘A’ grade.
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Other benefits for small business include increasing the lifetime capital gains exemption for farmers and fishermen to $1 million; legislating a plan to cut a regulation for every new rule introduced; and relaxing rules around the frequency new employers are required to remit payments to Canada Revenue Agency.
The Vancouver Board of Trade's (VBOT) business and finance committee also liked what it saw in the budget, said Iain Black, president and CEO of the business advocacy group.
Black said VBOT is pleased with the small business tax cut and also with measures designed to boost women in business, such as a program to help women entrepreneurs succeed and changing the Corporations Act to include comply and explain rules, which were adopted this year by the Ontario Securities Commission, for corporate boards. Comply and explain requires public companies to report their efforts to increase the number of women on boards and explain if they have fallen short of targets.
The tax changes show that the federal government is taking manufacturing seriously as a driver of the Canadian economy, said Marcus Ewert-Johns, vice-president of Canadian Manufacturers and Exporters B.C.
Economists expect provinces with strong manufacturing sectors to perform better this year than those that have depended heavily on oil production.
“When you look at today’s budget, it’s a sign that they’re supportive of the sector. We’d love to see the province [of British Columbia] do the same thing,” Ewert Johns said.
The ACCA is especially beneficial for businesses in this province because B.C. manufacturers tend to trail other provinces in productivity, Ewert-Johns said.
“People weren’t investing in machinery during the recession and now, with the [low] dollar, this will help people."
Aside from the capital cost allowance, Ewert-Johns pointed to other items in the budget, such as $65 million over four years to develop educational initiatives with post-secondary institutions to align training with employers’ needs.
“We hear from employers that they want to add a third shift, but they can’t wait four years for a student to come out of college.”
Other items that will benefit manufacturers include $50 million for small and medium-sized businesses to develop export markets and $100 million over five years for aerospace and automotive manufacturing development, Ewert-Johns said.