Federal Fall Economic Statement

The Government of Canada’s Fall Economic Statement (FES) was presented on Tuesday, November 21^st. It comes at a time when the Liberal Government is fighting to keep its head above turbulent political water. The Conservative Party enjoys a 15-point polling lead. Canadians are frustrated by, and tired of a housing market they consider inaccessible; consumer prices they see as out of control; and an economy they believe favours only the country’s wealthiest. Meanwhile, the Prime Minister and Finance Minister have acknowledged the fiscal capacity required for them to manage these challenges is increasingly narrow. They have few levers to pull. The FES’ narrow focus – housing affordability, controlling inflation, and building a fair economy – shows how fine a line the Liberal Government must walk.

In terms of specific measures in the FES of interest to GCCA members, they are:

• Amending the Competition Act through Bill C-56, the Affordable Housing and Groceries Act to enhance competition in the grocery sector, which will help bring down costs and ensure Canadians have more choice in where they buy their groceries.
• Securing commitments from Canada’s five largest grocery chains, which represent 76 per cent of the grocery market, to help stabilize prices for Canadians.
• Establishing a Grocery Task Force, which is supervising the big grocers’ work to stabilize prices, as well as monitoring and investigating other practices in the grocery sector, such as “shrinkflation.”
• Expanding on the success of the Red Seal Program to improve the mobility of tradespeople and eliminate further barriers, such as duplicative credential recognition.
• To ensure consistency with international tax norms, as well as greater consistency between the international shipping provisions of the Income Tax Act and the proposed new Global Minimum Tax Act, it is proposed to make the exemption for international shipping income in the Income Tax Act generally available to Canadian resident companies. This would allow shipping companies with management in Canada to continue their operations in line with both the Pillar Two international shipping exclusion and the exemption in the Income Tax Act. This measure would also effectively remove the incentive that the current tax rules create for shipping companies with management in Canada to incorporate and carry on certain international shipping activities in foreign jurisdictions.
• When the Government of Canada opens its markets to goods and services from other countries, Canada expects those countries to also grant Canadian businesses the same access that we provide their companies. To protect Canadian workers and Canadian businesses—and to develop mutually beneficial and resilient supply chains—going forward, Canada will consider reciprocity as a key design element for new policies, including certain clean economy investment tax credits, federal procurement, and federally-funded infrastructure projects. This includes reciprocal procurement to ensure that countries that do not provide Canadian goods and services with a similar level of market access do not unfairly benefit from access to Canada’s markets. Concurrent to this announcement, the government is releasing a policy statement with further details on Canada’s approach to reciprocity.