Due to increased governmental intervention, our business climate is not attractive for investors anymore. In addition to oil and gas sector, our business investments have gone down in many other sectors. Direct foreign investments have also significantly decreased. Whenever the government increases taxes or borrows additional dollars, businesses and individuals are not able to save and spend money. To increase our productivity, we need to invest more in efficient production processes, machinery and equipment as well as in innovation, research and development. Increase in productivity helps to create more job.
Corporate Tax rate
Amongst all the 36 OECD countries, Canada’s combined federal-provincial corporate income tax rate is the one of the highest. A gradual reduction from its current 15% would help businesses to keep more profit, leading to more investments. This will make $5-10 billion available to businesses, which will go into investments.
Capital gains tax
Capital gains tax not only lowers overall investments by reducing the return on investment, but also negatively affects the allocation of capital to its most productive uses. Decreasing the personal capital gains tax would encourage people to save more, leading to increased investments. Although, it will cause loss of government revenue, but it will lead to more investment and hence benefit our economy.
Business subsidies, bailing out of companies, conditional loan guarantees provided by the federal government favor some sectors with taxpayers’ dollars. These programs unfairly support some companies over the others. Lowering taxes for all businesses is a better approach than taking billions of dollars from the private sector and redistributing them through subsidies.
Supporting our natural resources
After recovery from Covid19, global demand for oil is expected to increase significantly for several decades. We have third largest oil reserve in the world and can fulfill this demand.
If this oil does not come western Canada, it will come from the countries with poor environmental or human rights standards such as Russia, and Venezuela. If no pipelines are built, it will be transported by rail, a much more dangerous method for both the environment and human populations.
The crisis of oil and gas industry of Canada due to lack of development by conservative and liberal governments have caused enough damage to our economy and loss of employment.
The approaches of the last few governments have halted the growth of Canada’s oil industry by preventing it from transporting and selling its products in the international markets.
Because of the uncertainty, investors pulled out of the Trans Mountain pipeline expansion project, which was bought by the federal government for $4.5 billion.
The impractical environmental requirements from the National Energy Board resulted in killing of the Energy East pipeline. Bill C-69 makes the process of building pipelines and other major energy projects next to impossible.
Because of these problems, the capital investments in the oil and gas industry have decreased from more than $80 billion in 2014 to less than $40 billion in 2019. Our limited access to international markets and sole dependency on the American market for exports causes loss of billions of dollars in foregone revenues to Canadian economy every year. This had a big negative impact on Alberta’s economy as well as on employment. Support our oil and gas industry can add billions to our economy.
Improving our manufacturing and service industry
Loss of automotive manufacturing plants In Ontario has not only caused significant negative impact on our economy but also loss of employment and jobs. Our exports, manufacturing and service industry has also suffered significantly in recent years. The centrist government would make it a priority to work on the projects supporting our economy.
Beside other factors, the skilled labour force i.e., the availability of workers with knowledge and skills is the foundation for any country’s economic growth. Due to an aging population, Canada is experiencing a rapid slowing in the growth of labour force from almost 1.5 percent annually about a decade ago, to below 1 percent annually, today. This can be offset by higher levels of skilled immigration and continuously improving knowledge and skills of the workers.
Another important factor is private investment, without which a stronger economic growth is not possible. Unfortunately, due to multiple factors our private-capital base is shrinking gradually despite a softer loonie that makes Canadian businesses more competitive in North America.
A number of policy changes to promote growth such as eliminating internal barriers to trade and investment and pursuing more open trade and investment can support our economy. Developing a more competitive tax system and streamlining tax administration can also be helpful. Increasing competition in many sectors of the economy, developing more efficient and effective regulations, supporting greater innovation in business is important. Continuing to support our oil and gas industry while investing in renewable energy sources, shifting energy consumption towards the new sources and increasing energy efficiency in buildings, and vehicles is important. We also need to develop and export our expertise in low-carbon goods and services globally.