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Canada Proposes Tax Cut on New Business Investment to Compete With US for Jobs
Canada proposes cutting tax on new business investment to compete with US for jobs
Key points
- Ottawa proposes cutting Canada's marginal effective tax rate on new business investment to 6.4 percent from 13 percent.
- The comparable US rate is 16.9 percent, and the government estimates a $27.7 billion fiscal cost over five years.
- The plan would let businesses immediately expense eligible assets such as computer equipment, software and rail infrastructure.
Why it matters. The measure could shift where companies place new capital as Ottawa seeks to reduce its dependence on the US, though a KPMG survey measured intentions rather than completed spending.
Finance Minister Francois-Philippe Champagne delivered Prime Minister Mark Carney's budget to Parliament in Ottawa on Thursday, proposing to cut the tax rate on new business investment to 6.4 percent from 13 percent. The comparable US rate is 16.9 percent, and the Finance Department estimates the measure would cost $27.7 billion over five years from 2026-27.
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Canada Proposes Tax Cut on New Business Investment to Compete With US for Jobs
Canada is offering businesses a tax advantage over the United States to attract investment and create jobs, according to Newsweek. The government says the proposed incentive would cut the marginal effective tax rate on new business investment to 6.4 percent from 13 percent. That rate measures the tax burden on an additional dollar invested. The comparable U.S. rate is 16.9 percent, according to the same government calculations. Prime Minister Mark Carney is pursuing the plan to make the country less dependent on its southern neighbour.