Canada’s Budget Would Raise Some Business Taxes, Cut Others

Two weeks ago, Canadian Finance Minister Chrystia Freeland released a “mini-budget” that includes new taxes on large businesses and responds to manufacturers’ calls for green energy investment incentives.

On the revenue side, Freeland’s outline includes a two percent tax on corporate stock buybacks that Freeland said would encourage domestic companies to invest in their Canadian operations and workers instead of overseas. “We want to see big Canadian companies taking their profits and investing them in the productive capacity of Canada and investing them in their workers,” Freeland said.

The budget would cut taxes on small businesses, meanwhile. Specifically, Freeland’s plan would reduce the small business burden from 15 percent to nine percent by more gradually phasing out these firms’ access to the small business tax rate.

Freeland also called for a 30 percent Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and asked Parliament to create refundable tax credits for clean technologies worth up to 30 percent of investment costs. That latter provision comes after Canadian manufacturers called for new incentives in order to close competitive gaps with the United States, which has increased support for manufacturing green energy technologies.

Finally, the budget offered projections for the fiscal and economic outlook for 2023, including predicting:

• The nation’s economy will experience growth up to 0.7 percent or a downturn amounting to -0.9 percent of the gross domestic product (GDP);
• A rising in the unemployment rate from 5.5 percent to 6.1 percent;
• A 3.5 percent increase in consumer inflation; and
• A debt-to-GDP ratio of 42.3 percent.

Click here to find more information about the budget.