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Policy Matters: 10 Measures that Will Cost the Government Little to Nothing but Will Help Our Economy
Policy Matters: 10 Measures that Will Cost the Government Little to Nothing but Will Help Our Economy
It’s time government adopts policies that prioritize our economic future.
The Canadian economy is starting to resemble a layer cake of crises — affordability, productivity, housing, supply chains, labour disruptions and more all stacked on top of each other. But there are ways to address these challenges that would cost little or nothing to implement.
House of Commons sitting days start again on September 16, which means the government will soon turn its attention back to governing. When it does, we think the following 10 economic measures (as recommended in our pre-budget submission to the House of Commons Standing Committee on Finance in August) should be key areas of focus:
- Review all government spending. A government-wide review to identify outdated or inefficient programming where funding can be reduced would save taxpayers money without compromising the delivery of priority services.
- Stop raising taxes. Using new corporate taxes to fund tax-and-spend policies deters business investment and can even negatively affect our vital trading partnerships, ultimately causing price increases and fewer opportunities for Canadians. With a manageable tax burden, businesses will have more money to reinvest in growing the business so they can better serve their customers.
- Review Canada’s tax system. Our complex tax system chases away business innovation and investment. First, it makes it hard for businesses to be successful since they have to allocate a lot of administrative resources towards ensuring they’re paying the right amount of tax. Second, it deters foreign investment since other companies will go to countries with more favourable tax environments instead. Canada needs a simple, fair and principled tax system that works in the best interests of Canadians and businesses.
- Modernize Canada’s regulatory framework. Overlapping, overcomplicated and outdated regulations are making it hard for businesses to do business in Canada. Modernizing our regulatory framework would streamline trade, incentivize innovation, lower business costs, and improve our competitiveness in the global economy.
- Reduce internal trade barriers. Speaking of trade, the federal government needs to help create freer trade within Canada. Currently, various obstacles including interprovincial regulatory differences are preventing the streamlined flow of goods and services across Canada. But these obstacles can be scrapped at little cost, resulting in lower prices, greater choice for consumers and improved mobility for workers.
- Allow the reinvestment of capital gains for new housing developments. In Canada, housing developers absorb the cost of taxes during production, only recovering their losses once the project is complete. Since projects can take years, that leaves limited capital for investment and even results in higher home prices. Allowing the reinvestment of capital gains would put Canadian developers on equal footing with those in the United States, encouraging them to keep their investments and business here.
- Protect crucial supply chains. Canada is a trading country — for the sake of our economy and our Canadian and international customers, our goods need to make it to and from market. But in 2023, Canada lost more hours worked to strikes than in the past 18 years! Government needs the tools to compel binding arbitration (using a neutral third party to deliver a decision) for the resolution of labour disputes in sectors that are critical to Canada’s supply chains, like railways and ports.
- Expedite credential recognition. Almost every industry in Canada is experiencing a labour shortage, yet many newcomers are unable to immediately use their credentials, education or skills upon arrival. Mutual credential recognition across Canada will let qualified workers and newcomers contribute wherever they are needed.
- Stimulate innovation and productivity with targeted tax credits. Investment tax credits —giving businesses a lower tax rate on certain types of research and development and intellectual property income — can reduce the cost of innovation, encouraging businesses to expand and modernize their operations. These tax credits should focus on industries that have the potential to drive growth in our economy and increase our productivity, such as agriculture, manufacturing and natural resources.
- Encourage investment in artificial intelligence. By better leveraging the potential of AI, businesses can increase their productivity and help Canada compete and prosper. However, that will require having legislation that encourages rather than discourages investment. Without amendments, Canada’s proposed AI legislation (Part 3 of Bill C-27, known as AIDA)does not provide enough certainty and clarity around definitions, applications and criminal liability, making it difficult and even risky for businesses to integrate this transformation technology into their operations.
It’s time government adopts policies that prioritize our economic future. By implementing policy measures that cost little to nothing and help businesses thrive, government can generate wealth, help our economy get back on track and create a prosperous future for Canadians across the country.
Read our pre-budget submission to the House Standing Committee on Finance ahead of the 2025 Budget.
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