The budget, tabled in the House of Commons by Finance Minister Jim Flaherty, was one of the most anticipated in recent years. With the global economy spiraling downward, a number of industries had their hands out looking for government funding to bring along some stability.
Prime Minister Stephen Harper needed permission from the Governor General just to get to this point, and the federal opposition parties were waiting in the wings looking for a reason to vote down the budget. An official comment from federal Liberal Party leader Michael Ignatieff is expected tomorrow.
The CTA however, gave immediate approval to Flaherty’s budget, largely on the strength of infrastructure spending.
Investment in Canada’s highways, roads and bridges factored significantly in the minority Conservative government’s action plan for stimulating the economy. In total, the federal government will provide $12 billion over the next two years in new or accelerated infrastructure funding.
“The trucking industry welcomes the increased investment in highways, bridges and border crossings announced in the budget,” says David Bradley, CEO of the CTA. “We are especially pleased that a number of the specifically mentioned projects were contained on a list of infrastructure priorities compiled by CTA.”
One downside, in the CTA’s view, was the budget did not include any reference to the government’s election promise to cut the excise tax on diesel fuel by 50 percent (or two cents), or to rebates or tax measures to specifically stimulate investment in new trucking equipment. However the budget did contain some tax relief for small businesses and introduced some new measures to improve the availability of credit including a $12 billion secured credit facility to support the financing of vehicles and equipment by consumers and businesses.
“Investment in tractors and trailers has come to an almost complete halt,” notes Bradley. “This is mainly a reflection of the state of the market for freight transportation service, but also a reflection of tight credit. If this budget and the stimulus package being introduced in the United States do provide a boost in economic activity, carriers will need to begin re-equipping their fleets and if the creation of the credit facility helps the industry to do that, it will be a good thing.
“These are extremely difficult times, the toughest the trucking industry has seen and our industry is as good a bellwether of economic activity as there is,” says Bradley. “Time will tell how effective this budget will be in helping to get things going again.”
Some of the business measures outlined in the budget include $13 billion in additional financing by increasing the flexibility and capacities of the financial Crown corporations, the Canada Mortgage and Housing Corporation, Export Development Canada, and the Business Development Bank of Canada. This includes at least $5 billion in new financing to be delivered through enhanced cooperation between these financial Crown corporations and private sector financial institutions under the new Business Credit Availability Program.
The annual amount of active business income eligible for the reduced (11%) small business federal corporate income tax will be increased, effective Jan, 1, 2009 to $500,000 from $400,000; and increasing the maximum eligible loan amount a small business can access under the Canada Small Business Financing Program. A temporary 100 percent CCA rate for eligible computers and software acquired after Jan. 27, 2009 and before February 2011. The 100 percent CCA rate will not be subject to the half-year rule.
Extending the deadline for issuing guaranteed instruments under the Canadian Lenders Assurance Facility, which helps ensure that lenders are not put at a competitive disadvantage when raising funds in global markets.
On a personal level, the budget plans to give money back to Canadians by raising the basic personal amount and increasing the limit for the two lowest tax brackets by 7.5 percent.
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