Canadian Plastics

Federal budget doesn’t support plastics manufacturing: Canadian Plastics survey

The federal budget presented last month offered some relief for Canadian manufacturers and exporters, but fell short of the sector's expectations.

April 1, 2008   Canadian Plastics



The federal budget presented last month offered some relief for Canadian manufacturers and exporters, but fell short of the sector’s expectations.

Industry association leaders had indicated that they would like to see the two-year Accelerated Capital Cost Allowance (ACCA) extended for five years. The industry also hoped to see a number of other measures — such as changes to the Scientific Research and Experimental Development (SR&ED) regime and an Employers’ Training Tax Credit — which would help manufacturers compete through investment and improve cash flow.

Instead of the recommended five-year extension of the ACCA, the new budget extends the two-year write-off by a year and provides two more years with declining depreciation rate. Additionally, the budget will extend SR&ED eligibility to R&D conducted off Canadian soil, raising it to a maximum of 10 per cent; this did not measure up to suggestions that SR&ED credits be made refundable or monetized. “I really do feel that manufacturing got shortchanged,” Serge Lavoie, president and CEO of the Canadian Plastics Industry Association (CPIA) told Canadian Plastics. “The government considerably watered down our original recommendations.”

Readers responding to a Canadian Plastics federal budget survey, sent out after the budget was released, echoed Lavoie’s disappointment. “I don’t think [the budget] comes remotely near anything you could call ‘supporting the manufacturing industries'”, wrote one respondent. “We have an unfair system that benefits large corporations, banks, importers and insurance companies; this budget is a band-aid solution,” another said. “We need more help from the Province than from the Feds,” wrote a third. “Our property taxes for industrial property are considerably higher than any other form of business.”

The need for more tax breaks in general was a common theme among respondents. “Taxes are too high compared with other countries,” one respondent wrote. “We are competing with the world and Canada has one of the highest tax levels anywhere.” (See sidebar at top right for a selection of results from Canadian Plastics’ federal budget survey.)


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