Canada aims to remain attractive location with low taxes and jobs growth

by Ray Clancy on April 15, 2011

Low taxes and job growth make Canada attractive

Low taxes in Canada are set to continue after the government announced its new action plan for jobs and growth which also includes a pledge to reduce red tape.

Finance Minister Jim Flaherty described the ‘Next Phase of Canada’s Action Plan’ as a low tax plan for jobs and growth, designed to keep the government on track to return to balanced budgets in the medium term and foster the right conditions for long term economic prosperity.

According to Flaherty, the return to budgetary balance is the cornerstone of the plan and the government intends to keep taxes low, focus increasingly on controlling government spending, support job creation, and reduce regulatory pressure on businesses through the Red Tape Reduction Commission.

It will also engage in targeted investment in projects of national importance and seek to maintain Canada’s brand as a good place to invest.

Among the measures announced were the creation of a temporary Hiring Credit for Small Businesses, to encourage additional hiring in the sector, and the extension of the accelerated capital cost allowance rate for investment in processing machinery and equipment, for two years.

Flaherty said the Budget would build on the plan set out in 2010 for budgetary balance, which, he argues, is on track to generate savings of CA$17.6 billion over the next five years.

To ensure efficiency, the government will close loopholes in the tax system and launch a one year Strategic and Operating Review of department spending across the whole of government in 2011/12.

Flaherty dismissed criticisms that have been levelled at the government for their handling of the economic crisis, which has focused on the decision to implement tax cuts. He said that these cuts had been introduced in order to stimulate the economy and that, as a result, Canada is emerging from the global recession as one of the world’s top performing advanced economies.

He said that the government will not succumb to Opposition demands to impose tax increases, as he believes such a strategy would lead to continuing deficits and higher taxes for all Canadians. Instead, his message is ‘we will keep taxes low, to keep creating jobs for Canadians’.

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