Fiscal Discipline Essential As Economy Improves, Business Leaders Say
The 2010 federal budget recognizes that economic recovery remains fragile and job creation tentative, but its commitment to fiscal discipline will ensure that Canada emerges from the current period of economic weakness in better shape than ever, the Canadian Council of Chief Executives (CCCE) said today.
“The immediate priority is to make sure that the recovery takes root and that employment growth picks up,” said The Honourable John Manley, President and Chief Executive Officer of the CCCE. “For that reason, we support the government’s intent to implement the fiscal stimulus measures contained in the second half of its two-year Economic Action Plan.”
“At the same time, it is vital that all Canadians understand the importance of returning to balanced budgets – at both the federal and provincial level – as rapidly as practicable once our economy has achieved a firm footing,” Mr. Manley said.
“Doing so will require tough choices, but we know from recent experience the advantages of living within our means. Indeed, one of the main reasons that Canada was not hit as hard as many other countries during the global downturn is that our governments entered the recession in a position of fiscal strength, having consistently run surpluses and paid down debt for more than a decade.”
The steadfast commitment to fiscal discipline by federal and provincial governments of all parties has served Canadians well. Euromoney magazine recently praised Canada’s “reputation for sound fiscal policy,” while The Economist lauded Canada’s “conservative and well-regulated banking system”. The International Monetary Fund has said that “with household and financial institution balance sheets stronger than in many countries, Canada’s economy is relatively well-positioned to resume expansion.”
The global downturn has created an important opportunity to build on these strengths. One major step forward in the 2010 budget is the decision to make Canada a tariff-free zone for industrial manufacturers, by unilaterally eliminating customs duties on imports of both machinery and equipment and production inputs.
Canada is on track to achieve a significant corporate tax advantage within North America and internationally. By 2012, with the cooperation of most of the provinces, Canada will have the lowest statutory corporate income tax rate among the G7 leading industrialized countries. Also by 2012, Canada will have an overall tax rate on new business investment that is lower than the average of the 30-nation Organisation for Economic Co-operation and Development (OECD).
“These tax changes, combined with responsible fiscal policies and unwavering support for open markets and trade liberalization, send an important signal to the rest of the world,” Mr. Manley said. “The past two years have been painful for many Canadians and have strained public finances. But as the economy improves, the renewed commitment to fiscal discipline promised in this budget will enable Canada to position itself as a leading global destination for business investment and talented individuals.”
Founded in 1976, the CCCE is composed of 150 chief executives and leading entrepreneurs from all major sectors and regions of the country. The companies they lead collectively administer $4.5 trillion in assets, have annual revenues of more than $850 billion, and are responsible for most of Canada’s private-sector exports, investment and training.