On Friday, Canadian Minister of Finance Jim Flaherty introduced legislation in the House of Commons to implement key elements of Canada’s Economic Action Plan announced by the Finance Department two weeks ago. Similar to the stimulus legislation currently under debate in the U.S. Congress, Canada's Economic Action Plan focuses on providing additional tax and employment benefits to small businesses and individuals, funds for social services, infrastructure and job training, and improving access to financing to stimulate growth in the economy. The proposed legislation, which is intended to "[r]estore confidence and support Canadians and their families through the current global recession," includes:
- Increasing the basic personal amount that Canadians can earn tax-free and the upper limits for the two lowest personal income tax brackets by 7.5 per cent above their 2008 amounts;
- Increasing to $25,000 the maximum amount eligible for withdrawal from a Registered Retirement Savings Plan under the Home Buyers’ Plan;
- Extending for a two-year period, all regular Employment Insurance (EI) benefit entitlements by five extra weeks and increase the maximum benefit duration to 50 weeks from 45 weeks;
- Extending the Wage Earner Protection Program to cover severance and termination pay owed to eligible workers when an employer does not pay due to its bankruptcy;
- Raising to $500,000 the amount of active business income eligible for the 11 per cent small business income tax rate;
- Providing over $440 million in savings for Canadian industry over the next five years by permanently eliminating tariffs on a range of machinery and equipment to lower costs for Canadian producers in a variety of sectors, such as forestry, energy and food processing;
- Increasing the maximum eligible loan amount under the Canada Small Business Financing Program for loans made after March 31, 2009, potentially increasing lending under the program by up to $300 million per year;
- Providing the Canada Deposit Insurance Corporation with greater flexibility to enhance its ability to safeguard financial stability in Canada;
- Allowing Export Development Canada and the Business Development Bank of Canada to extend additional financing to Canadian businesses;
- Modernizing the Investment Canada Act to encourage foreign investment and make sure that new investments cannot jeopardize Canada’s national security; and
- Introducing provisions to the Competition Act to protect consumers from anti-competitive behavior as well as unscrupulous business practices.
Mr. Flaherty expects the Economic Action Plan to "[s]ee Canada emerge from this recession on a sustainable fiscal footing, with better infrastructure, a more skilled labour force, lower taxes and a more competitive economy."