The Canadian Manufacturing Coalition (CMC) recently sent a letter to Canada’s Federal Minister of Finance, the Honourable William Morneau, on behalf of thousands of members of undersigned manufacturing associations. The letter emphasized the importance of manufacturing to the Canadian economy and urges the government to make several tax reforms for the upcoming 2018 Federal Budget in order to boost 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 the new US rules.
- Introducing an Investment Tax Credit on purchases of new equipment and software of between 10-15% 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.
- Lowering the top marginal personal income tax rate from 33% to 31%.
- Reforming the Scientific Research and Experimental Development (SR&ED) program to lower the administrative burden and support a broader range of corporate innovation needs, especially product commercialization.
CMC believes that currently the SR&ED program is “focused on a limited range of primary research and discovery” through an “overly aggressive audit function” rather than provide support particularly with commercialization and scale-up innovation needs.
According to CMC, “Canadian manufacturing is at a critical juncture. While output and exports are near an all-time high, capital investment and foreign direct investment have fallen, resulting in weakening productivity and global competitiveness, and fewer new innovations.”
Although CMC applauds various government initiatives (such as funding of Super Clusters, the creation of the Strategic Innovation Fund, the establishment of Innovation Canada, the expansion of training programs, and a long term national infrastructure plan), the letter stresses that “the ongoing challenges facing our economy require that more must be done to support investment and growth in our sector and across the business community more generally.”