Little cheer for manufacturing in budget

The industry is disappointed in federal Finance Minister Jim Flaherty's budget, released on Tuesday. While it does extend the Accelerated Capital Cost Allowance for an additional three years, for example, the two year depreciation will be available for only one additional year and then switches to 40 percent and 30 percent for the remainder of the program.

"In a budget loaded with a variety of carefully targeted tax cuts and spending initiatives, there is disappointingly little relief for plastics and other manufacturers," observed CPIA president Serge Lavoie. "This is not a budget that goes out of its way to recognize the problems faced by the manufacturing sector and it probably signals this government's intention to let manufacturing activity decline as a result of our strong currency and increased global competition." The SR&ED tax credit system is being adjusted, with a 10 percent allowance for international collaborative research. The expenditure limit for R&D spending by Canadian owned privately held companies goes up from $2-million to $3-million, and the upper limit for taxable capital and income phase-out are up to $50-million and $700,000 respectively. The total benefit of these measures will be $70-million through 2009, which again is short of industry recommendations to make Scientific Research & Experimental tax credits refundable, to extend the credit to pre-commercialisation activity, and provide an allowance for collaborative research.

Lastly, there were no initiatives to provide an employers' training tax credit creditable against Employment Insurance premiums. This, too, was an industry recommendation supported by the manufacturing study. www.cpia.ca