Federal government delivers Update on Economic and Fiscal Projections
Canadian Tax Alert
November 8, 2011
In a November 8, 2011 speech at the Calgary Chamber of Commerce, Finance Minister James M. Flaherty delivered his fall Update on Economic and Fiscal Projections. The Update moves the target for a balanced budget, by one year, to the 2015-2016 fiscal year. Real gross domestic product (GDP) growth in 2011 is expected to be 2.2 per cent, down from the 2.9 per cent projected in the June 2011 federal budget. In 2012, real GDP is now forecast to be 2.1 per cent, down from the June forecast of 2.8 per cent.
The government now projects the following budget deficits:
- 2011-2012: $31.0 billion
- 2012-2013: $26.4 billion
- 2013-2014: $15.0 billion
- 2014-2015: $3.5 billion
The government announced two changes to the Employment Insurance (EI) program. The government has halved the maximum increase in EI premiums for 2012 from 10 cents per $100 for employees and 14 cents per $100 for employers to five cents and seven cents respectively. In our coverage of the 2011 federal budget we noted that the Work-Sharing program, available across Canada to EI claimants, would be renewed until August 2012. Today, the Minister announced that the government will provide an additional extension of up to 16 weeks for active, recently terminated or new work-sharing agreements until October 2012.
No new taxes were announced. However, the government did not rule out additional spending measures should the economy fall into recession.
The future of tax
Deloitte applauds the government for its stewardship of the Canadian economy through the recent recession. We support the use of tax policy to enhance Canada’s national competitiveness and stimulate economic growth. In a recent letter to Minister Flaherty we outlined our recommendations for the 2012 federal budget; these fall in three main categories:
- Foster business innovation through improvements to the SR&ED program
- Spur a “start-up economy” with improved financing support
- Attract and retain the world’s most talented people
To read more about Deloitte’s tax policy vision for Canada, please visit thefutureoftax.ca.
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