Reaction to yesterday’s federal budget continues to roll in, with several industry associations and banks adding their voices to the largely positive choir. Here’s a selection of their thoughts:
The Canadian Institute of Chartered Accountants gives the federal budget a B+ rating, saying it positions Canada well for the future while providing prudent fiscal management.
“Budget measures being introduced are designed to serve the short-term while maintaining a vision that embraces the long-term,” says Kevin Dancey, president and CEO. “It is encouraging to see the government bringing the books back into balance through expenditure controls rather than tax increases or provincial off-loading.”
He adds, “We are supportive of any actions taken to put long-term budgetary expenditures within a sound fiscal framework.”
In addition, CICA was looking for a stronger indication the government is serious about addressing the complexity of the country’s tax system and its undue reliance on personal taxes.
The budget could have done a lot more toward simplifying Canada’s tax code, the groupd says, with the annual cost of compliance being $12.6 billion for Canadian businesses alone. Changes to the tax system are piecemeal and will not bring the significant change required to give Canada the cost-effective and efficient tax system it needs.
“This is unfortunate, considering the impact tax simplification would have for every Canadian household and every Canadian business,” says Anthony Ariganello, president and CEO. “We hoped for more, and, frankly, this was a missed opportunity for a win-win situation.”
However, the government has delivered a plan that will not only address the deficit but encourage innovation through mechanisms like industry-academic research partnerships and a $400-million dollar commitment to help increase private sector investment in early stage risk capital.
“It’s a very reasonable transition period,” says Albert Baker, tax policy leader, speaking about the eventual change to retirement age. “All countries are living through the baby boomer effect and so the cost of that program is going to triple, so countries around the world are taking the necessary steps.”
The Canadian Venture Capital and Private Equity Association supports the government’s decision to maintain the innovation ecosystem in its 2012 budget.
“In particular, we were pleased to see that the federal government has taken decisive action to address the acute shortage of venture capital by committing $500 million to the industry,” says Gregory Smith, president of the CVCA and managing partner of Brookfield Financial.
He adds, “We are pleased that the federal government has opted to keep the structure of the Scientific Research and Experimental Development program largely intact. We do support making the program more effective and will be examining the proposed modifications closely.”
Compared with other G7 members, Canada has fared well, despite the debt crisis and European banking crisis that continue to undermine the world economy. While Canada expects modest growth in the short term, the government has chosen to support business and entrepreneurs directly by encouraging innovation and prosperity.
Canadian Chamber of Commerce
“Today’s budget provides a solid foundation on which to build, and we urge the government to press forward with the further measures we have proposed to secure Canada’s economic future,” says Perrin Beatty, president. “In a world awash in debt, we are securing crucial fiscal flexibility to survive future downturns.”
The Minister of Finance tabled perhaps his first true Conservative Budget, designed to support Canada’s long-term economic strengths and promote job growth, according to the Canadian Association of Life Underwriters.
In 1998, the insurance industry made a submission to the Department of Finance outlining various tax issues as well as policy options for consideration. Since then there have been several attempts to deal with these issues, but other tax priorities have prevented Finance from undertaking a full scale review of several rules. However, the Federal Government now appears poised to introduce a major overhaul of various rules to both update and simplify them.
It appears that Finance now feels that enough is enough, and Budget 2012 proposes new prohibited investment and advantage rules to directly prevent RCAs from engaging in non-arm’s length transactions. These rules will be based very closely on existing rules for TFSAs and RRSPs. In addition, Budget 2012 sets out a new restriction on RCA tax refunds in circumstances where RCA property has lost value.