Breaking down federal budget 2019 for business

On Tuesday, March 19, 2019 the federal government released its final budget before the October 21, 2019 federal election.
There are a number of areas of interest to the Peterborough business community:


• Broadband
• Innovation
• Regulation
• Workforce Training
• Pharmacare
• Taxation
• Real Estate Audit Teams
• Housing Supply
• Tourism
• Fiscal Position
• Municipal Gas Tax Fund

Broadband
The federal government has announced the following plans:


• Commitment in which 95% of Canadian homes and businesses will have access to internet speeds of at least 50/10 Mbps by 2026 and 100% by 2030, no matter where they are located in the country. 
• Up to $1.7 billion in new targeted initiatives that will support universal high-speed internet in rural, remote and northern communities, including: 
• Up to $1.7 billion over 13 years to establish a new national high-speed internet program, the Universal Broadband Fund, to extend “backbone” infrastructure to underserved communities and support “last-mile” connections for the most difficult-to-reach communities. 
• Included in the Universal Broadband Fund commitment, top up the Connect to Innovate program and secure advanced satellite capacity to bring reliable high-speed internet to the most challenging rural and remote homes and communities. 
• The Canada Infrastructure Bank will seek to invest $1 billion over the next ten years and leverage at least $2 billion in additional private sector investment to increase broadband access for Canadians. 

Comment:
There is no doubt that investment in broadband infrastructure will improve economic opportunities for our area businesses. This announcement and recognition of the private sector role is important to seeing the goals reached

Innovation
The federal government has announced the following plans:

• Elimination of the income threshold to access the enhanced 35% refundable Scientific Research and Experimental Development (SR&ED) tax credit. 

Comment:
The goal is to reach and encourage more Small and Medium Enterprises into the innovation space. Canada is very well-known for its ability to create businesses and this has the potential to help those businesses scale-up in Canada.

Regulation
The federal government has announced the following plans:
Create three “Regulatory Roadmaps” to address stakeholder issues and irritants in:

• Agri-food and aquaculture
• Health and bio-sciences
• Transportation and infrastructure

These roadmaps, to be released in the coming weeks, will focus on:

• Creating a user-friendly regulatory system;
• Using novel or experimental approaches; and
• Facilitating greater cooperation and reducing duplication.

Budget 2019 will also provide $3.1 million per year to the Treasury Board Secretariat (starting in 2020–21) to support its work on interprovincial and international regulatory cooperation priorities.
Comment:
Our Peterborough Chamber member businesses consistently report concern over the amount of regulatory burden from government. We look forward to learning more about the role of industry in informing the discussions as this is an area of urgent need.

Workforce Training
The federal government has announced the following plans:

• The Canada Training Credit is a benefit intended to help workers pay to upgrade their skills by providing a non-taxable credit to help workers pay for training costs. It will also support workers in training through a new Employment Insurance (EI) Training Support Benefit.
• To offset the increased costs resulting from EI premiums, the government proposes to introduce an EI Small Business Premium Rebate.
• The Budget also proposes a number of investments to encourage more young people to consider skilled trades.
• Expand the number of work-integrated learning opportunities, with an aim to create 40,000 work placements for students by 2023-24.
• $35.2 million over five years, with $7.4 million per year ongoing, to make the Global Talent Stream pilot a permanent program. 

Comment:
In the Peterborough Chamber's most recent membership survey, retaining and recruiting talent was identified as one of the most prevalent challenges. The Chamber is hopeful that these new programs will help our member businesses. Along with the Canadian Chamber of Commerce we would like to see the Global Talent Stream bring a wider range of skilled immigrants to rural and smaller urban communities such as ours.

Pharmacare
The federal government has announced the following plans:

• Work with provinces, territories and stakeholders to create the Canada Drug Agency, including $35 million over four years to establish a transition office in the development of this vision. 
• Up to $1 billion over two years, with up to $500 million ongoing, to help Canadians with rare diseases access the drugs they need.

Comment:
The Peterborough Chamber of Commerce has been a proponent of a pharmacare plan that fills gaps in the existing system. Along with the Canadian and Ontario Chambers we encourage a fiscally responsible approach.

Taxation
The federal government has announced the following plans:

• $150.8 million over five years for CRA to target non-compliance associated with cryptocurrency transactions and the digital economy, proper reporting of income by non-residents, and combating offshore non-compliance. 
• $65.8 million over five years to improve CRA’s information technology systems so that infrastructure used to fight tax avoidance continues to evolve. 
• $34 million over five years for CRA to hire additional staff to process adjustments to T1 returns post-filing. 
• $16 million over five years to make permanent the dedicated telephone support line for tax service providers. 
• Aligning Canada’s employee stock option tax treatment with the United States by applying a $200,000 annual cap on stock options that may receive tax-preferred treatment for employees of large, long-established, mature firms. 

Comment:
The Peterborough Chamber along with the Canadian Chamber of Commerce believe that a Royal Commission to examine the tax system is an appropriate exercise. We are very much in favour of the proper collection of taxes without burdening law-abiding taxpayers.

Real Estate Audit Teams
The federal government has announced the following plans:

• Provide the CRA with $50 million over five years, starting in 2019–20, to create four new dedicated residential and commercial real estate audit teams in high-risk regions, notably in British Columbia and Ontario.
• These teams will work to ensure that tax provisions regarding real estate are being followed, with a focus on ensuring that:

1. Taxpayers report all sales of their principal residence on their tax returns;
2. Any capital gain derived from a real estate sale, where the principal residence tax exemption does not apply, is identified as taxable;
3. Money made on real estate flipping is reported as income;
4. Commissions earned are reported as taxable income; and
5. For Goods and Services Tax/Harmonized Sales Tax (GST/HST) purposes, builders of new residential properties remit the appropriate amount of tax to the CRA.

The expected revenue from this initiative is $68 million over five years, starting in 2019–20.
Comment:
As with taxation above, we hope these changes do not burden law-abiding taxpayers.
If any realtors would like to weigh in on these proposed changes please contact Sandra Dueck at [email protected]

Housing Supply
The federal government has announced the following plans:

• To provide more affordable rental options for middle class Canadians, Budget 2019 proposes to provide an additional $10 billion over nine years in financing through the Rental Construction Financing Initiative, extending the program until 2027–28.
• With this increase, the program would support 42,500 new units across Canada, particularly in areas of low rental supply. On an accrual basis, this represents an investment of $829.5 million over 19 years, starting in 2019–20.

Comment:
Housing is an issue critical to Peterborough. The available supply, mix and how we can collaborate even more to achieve successes in this space is an important conversation for everyone in the community.

Tourism
The federal government has announced the following plans:

• Invest $58.5 million over two years, starting in 2019–20, to the Regional Development Agencies for the creation of a Canadian Experiences Fund, which will prioritize tourism for rural and remote communities, Indigenous tourism, winter tourism, inclusive tourism, and farm-to-table tourism.
• Invest $5 million to Destination Canada for a tourism marketing campaign.
• Create a seventh Economic Strategy Table dedicated to tourism.

Comment:
Tourism is an important pillar of Peterborough's economy. It is positive to see the commitment to rural tourism.

Fiscal Position

• The federal deficit is projected to continuously decline from $19.8 billion in 2019-20 to $9.8 billion by 2023-24. 
• The federal debt-to-GDP ratio is expected to gradually decline from 30.7% in 2019-20 to 28.6% by 2023-24. 

Comment:
The Canadian Chamber of Commerce encourages continuous reduction in budget deficit and a detailed plan to get back to a balanced budget.

Municipal Gas Tax Fund
The federal government has announced the following plan:

• $2.2 billion one-time transfer through the Federal Gas Tax Fund to address infrastructure deficits and short-term priorities in municipalities and First Nations communities. 

Projects that would fit under this one-time top-up include:

• Local roads and bridges
• Highways
• Short-sea shipping
• Short-line rail
• Regional and local airports
• Broadband connectivity
• Public transit
• Drinking water
• Wastewater
• Solid waste
• Community energy systems
• Brownfield redevelopment
• Sport and recreation
• Cultural and tourism
• Disaster mitigation
• Capacity building

Comment:
The Peterborough Chamber of Commerce feels that there is a lot of opportunity with this announcement to perhaps realize projects that were out of reach. It also highlights the ability of the federal government to deliver funding directly to municipalities.

Resources

Canadian Chamber of Commerce Rapid Policy Update
Ontario Chamber of Commerce Rapid Policy Update
2019 Federal Budget