2013 Canadian federal budget: Difference between revisions

2013 Budget of the Canadian Federal Government

Presented	21 March 2013
Parliament	41st
Party	Conservative
Finance minister	Jim Flaherty
Website	http://www.budget.gc.ca/2013/doc/plan/toc-tdm-eng.html
‹ 2012 2014›

The Canadian federal budget for fiscal year 2013–2014 was presented to the Canadian House of Commons by Finance Minister Jim Flaherty on 21 March 2013. the budget bill was tabled in the legislature on 29 April 2013 as the Economic Action Plan 2013 Act, No. 1. A second budget bill will be tabled in the autumn, which will include elements excluded from the first bill, such as the Canada Job Grant.

Border

The budget proposal also approves projects related to information-sharing and infrastructure for the "Beyond the Border" perimeter security program undertaken with the United States. This includes upgrading border posts at Saint-Bernard-de-Lacolle (Quebec), Landsdowne (Ontario), Emerson (Manitoba), and North Portal (Saskatchewan), implementation of a cargo security program for port facilities in Vancouver and Montreal, and $19 million toward the Detroit River International Crossing.

Privacy advocates and civil liberties groups have criticized the data sharing arrangement, in which Canada and the United States will share with each other information about land entry and exit of individuals, to be used for immigration, refugee, and visa programs.

In order to cover the costs associated with processing visa claims and immigration applications, the budget proposal allocates an additional $42 million for visa and $44 million for citizenship programs. This is expected to reduce the backlog of almost 320,000 unprocessed citizenshop applications. The costs for submitting an application are also increased.

Taxation

As a result of the 2013 budget, import tariffs for 37 goods will be eliminated—specifically sporting goods (excluding bicycles) and baby clothing made of "cotton, synthetic fibres, textile materials, wool or fine animal hair." Such cuts will result in decreased tax revenues of $76 million for the Government of Canada.

Tariffs on other goods in 1290 product classes will increase owing to a change in status classification of 72 trading nations from "developing" status to "fully developed". Imports from nations including Brazil, China, India, Indonesia, and Russia will be affected by reclassification, and they will no longer have a general preferential tariff (GPT). The average increase will be 3%, and will result in $333 million annually in additional tax revenues for the Canadian government. Doug Porter, the chief economist of the Bank of Montreal, expressed concern about adverse affects, commenting that such increases will widen the disparity in prices of goods in Canada compared to the same goods in the United States, which may aggravate cross-border shopping. The budget also provides that rules of origin will be amended "to ensure imported textiles and apparel from poorer nations" will not be affected if their manufacture requires materials from promoted nations.

Some goods affected by these tariff increases include solid-state drives and USB devices (from no tariff to 6%), most of which are imported from China, South Korea, Thailand and Malaysia, four of the nations losing GPT status.

There are no new tax measures or tax reductions in the proposed budget bill, but some tax loopholes will be eliminated, which is expected to generate an additional $880 million in tax revenues annually.

The budget proposal includes a reward system for individuals who report Canadians with an offshore account, and eliminates the tax deduction for leasing a safe deposit box. The Stop International Tax Evasion Program will allow the Canada Revenue Agency to reward informants up to 15% of taxes collected if it exceeds $100,000. Critics have complained that a planned $60 million cut of the CRA budget and its limited resources imply the CRA will not be able to investigate or pursue tax evaders. Another criticism is that the reward may be too small, or that most rewards may be accrued by non-Canadians working in offshore institutions. Walid Hejazi of the Rotman School of Management said that the program is unlikely to generate much revenue, but may act as a deterrent for some potential tax evaders.

There is an increase in the lifetime capital gains exemption to $800,000, which will be indexed to inflation, a reduction of the dividend tax credit, and elimination of the use of financial strategies such as loss trading and synthetic disposition. Financial institutions will be required to report any electronic fund transfer exceeding $10,000.

The Federal Economic Development Agency for Southern Ontario will have its funding renewed for another five years, averaging about $184 million annually.

Infrastructure

The proposal allocates about $2 billion annually from gasoline tax revenues to municipalities for infrastructure development and maintenance, including public transit, under the Community Improvement Fund starting in 2014–2015. It replaces the similar fund introduced in the 2005 budget by the 38th Canadian Parliament, and increases by 2% annually. Infrastructure projects that may use such funding include highways, short-line rail, regional and local airports, short-sea shipping, broadband internet connectivity, redevelopment of brownfields, disaster mitigation, and those involving culture, tourism, or sport and recreation. Municipalities will receive funding for projects on a per capita basis.

It also allocates $248 million for weather monitoring infrastructure.

The Building Canada Fund managed by Infrastructure Canada will be renewed for ten years, receiving $210 million in 2014-2015 and increasing annually to $2.1 billion in 2021-2022. About $4 billion over ten years will be allocated for projects of national significance, including development and expansion of public transit and roads, and $155 million will be used for First Nations infrastructure programs. The fund will also be extended for use by educational institutions and airports. The Goods and Services Tax rebate for municipalities was also extended for 10 years, by which municipalities will be able to collecetively claim about $1 billion annually via the GST Rebate for Municipalities.

Environment

In a press release on 21 March 2013, the Nature Conservancy of Canada supported the $20 million, one-year extension of the Natural Areas Conservation Program, a national public-private partnership by which ecologically sensitive lands are acquired anc conserved.

Sustainable Development Technology Canada, a government-funded venture capital firm, will receive $325 million over eight years.

Culture

Government event promotion and execution, such as activities related to Canada Day and Winterlude, will be transferred from the National Capital Commission to the Department of Canadian Heritage, which will also result in the transfer of up to 80 employees.

The budget allocates $8 million to renovate Massey Hall in Toronto.

Business

The capital cost allowance (CCA) for manufacturing and processing equipment is extended to the end of 2015. The budget also allocates $60 million over five years for use by incubator and accelerator investment organizations, and $70 million over three years to create 5,000 internship positions for recent post-secondary graduates.

Canada Job Grant

The budget establishes the Canada Job Grant, which provides $5,000 for an individual's training in trades and skills, requiring matching funds from provincial governments and the individual's employer.

The Canada Job Grant is a training fund, that will be established in 2014 via the budget, which will enable individuals to receive up to $15,000 in training services, funded equally by the federal government, a provincial government, and the individual's employer. The federal government expects to fund the $300 million program by renegotiating the Labour Market Agreement it has with the provinces, which expires in 2014. The program will train 130,000 individuals annually when it is fully operational.

Brad Duguid, Ontario's minister of training, colleges, and universities, stated that the program will shift $194 million from programs "that target our most vulnerable and have the greatest barriers to entering the workforce".

Quebec's Minister of Finance, Nicolas Marceau, stated that the federal government was "undoing and sabotaging what Quebec has long been doing". On 22 March 2013, Labour Minister Agnes Maltais of the Government of Quebec formally requested exclusion from the program. It prefers to operate its own program, instead of participating in a joint federal-provincial program.

Objections were also raised by First Nations about a five-year $241 million skills training program available only to reserves which make it "mandatory for those receiving income assistance payments to be retrained".

Provincial government officials also stated that it removed full control of spending of the funds by the provinces.Nicolas Marceau, the Minister of Finance of Quebec, described as "economic sabotage".

Other

Approximately 12,000 government services employees will be fired, and 7,000 jobs will be eliminated via attrition. A government official may sit at any collective bargaining negotiation between a Crown corporation and its employees, and the government must approve the terms of such negotiations.

The proposed budget bill also calls for administrative changes to government operations. It will merge the Canadian International Development Agency into the Department of Foreign Affairs and International Trade.

The budget discontinued funding for mixed police squads, that is police squads composed of members from police services of more than one municipality. This funding had been used in Quebec to fund regional police services "to help fight organized crime".

The opposition parties have complained that the budget bill is an omnibus bill, like the 2012 budget, containing non-budgetary items.

The government will invest $23 million over two years to attract foreign students.

See also

• List of tariffs in Canada

References

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External links

• Budget 2013 at Finance Canada
• Federal budget 2013-14: continued focus on jobs and long-term growth, Tax Alert - Canada (2013, issue 10, 21 March 2013) by Ernst & Young
• Canada: 2013 Federal Budget Highlights by Davies Ward Phillips & Vineberg LLP, 22 March 2013
• Jim Flaherty: "I intend to stay until the budget is balanced in 2015" at National Post, by John Ivison, 22 March 2013
• Federal budget ignites debate over what science is forat The Globe and Mail, by Ivan Semeniuk, 25 March 2013