TORONTO, Feb. 23, 2017 /CNW/ - Ottawa should set out a path back toward balance to inspire confidence among savers and investors, says the C.D. Howe Institute's annual Shadow Federal Budget. In "Getting Real: A Shadow Federal Budget for 2017," authors William B. P. Robson, Alexandre Laurin and Rosalie Wyonch show how the federal government can cut the deficit while boosting economic growth and opportunities for Canadians.
Among the key recommendations for Finance Minister Morneau's second budget:
- To set a credible path to balance, hold the line on transfers to other levels of government, contain Ottawa's own compensation costs and shrink or eliminate many tax expenditures, including the age credit, the LSVCC credit and some boutique credits;
- To encourage businesses to grow, replace preferential tax treatment for small businesses with temporary preferential treatment for young businesses;
- Foster equity-financed investment by establishing an allowance for corporate equity that relieves ordinary returns to capital from corporate income tax;
- Prioritize infrastructure projects Ottawa can drive on its own, and dispose of non-core assets such as airports;
- To encourage commercialization of R&D, establish a "Patent Box" to lower taxes on income from Canadian intellectual property;
- To make Canada more attractive to high earners, raise the threshold for the top personal tax rate from $202,800 to $402,800;
- To level the playing field for domestic sellers of digital content, require foreign sellers to remit tax on sales to Canadians;
- To reduce distortions and unclog the border, raise the minimum threshold for sales tax and customs duties levied on imports, and begin the phase-out of all import tariffs;
- To discourage the black market and leave room for provincial levies, apply only GST – no excise tax – to marijuana; and
- To help Canadians preparing for retirement and already retired, raise limits for RRSP and defined-contribution pension plan savers, and eliminate mandatory drawdowns from registered retirement income funds (RRIFs).
"This shadow budget is designed to provide Canadians with the confidence that the country will successfully meet the challenges of slow growth, lower commodity prices and an aging population," conclude the authors.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
For the report go to: https://www.cdhowe.org/public-policy-research/getting-real-shadow-federal-budget-2017
SOURCE C.D. Howe Institute
For further information: William B. P. Robson, President and CEO, Alexandre Laurin, Director of Research, and Rosalie Wyonch, Policy Analyst, C.D. Howe Institute: 416-865-1904 or email: firstname.lastname@example.org.