• Both the International Monetary Fund (IMF) and the Organization for Economic Co- operation and Development (OECD) forecast that our economy will be among the strongest in the G7 this year and next.
• Only recently, Moody’s renewed Canada’s triple-A credit rating based on Canada’s – and I quote – “ economic resiliency, very high government financial strength, and a low susceptibility to event risk.”
• More recently, that same top rating was affirmed by Fitch, with a stable outlook, citing a “culture of conservative policymaking” that allowed Canada to weather the global recession and recover faster than other countries.
In addition, international
investors have also given Canada a strong vote of confidence with their own money. After a 10-year
absence, Canada returned to the global bond market in 2009-10 with two highly successful and oversubscribed offerings, one in U.S. dollars and the second in euros.
As with all foreign currency
borrowing by the Government of Canada, the proceeds were used to fund Canada’s foreign currency reserves. They were not used to fund government spending. In the same spirit of careful fiscal management, our government has designed initiatives to achieve substantial savings for taxpayers through greater efficiency and effectiveness in government. According to the OECD,
Canada’s total government net debt-to-GDP ratio stood at 30.4 per cent in 2010, compared with an average net debt of 66.2 per cent among G7 countries. Recently, the IMF Fiscal Monitor forecast that Canada will continue to have by far the lowest total government net debt-to-GDP ratio in the entire G7,
300 | The Parliamentarian | 2011: Issue Four
33.3 per cent in 2016 compared to the G7 average of 92.9 per cent. Once it is fully implemented three years from now, our deficit reduction action plan will achieve at least $4 billion in annual savings, or five per cent of the $80 billion in programme spending being reviewed, and help the government to return to balanced budgets in the medium term.
Pro-growth economic agenda
Among other pro-growth policies, our government introduced tax reductions, enabling employers and entrepreneurs to invest more of their revenues back into their operations. This tax advantage, that we targeted back in 2007, is now coming into full force, putting Canadian businesses at a real advantage just when they need it most – and just when Canadians workers need it most – to drive Canada’s economic recovery and future growth.
A cornerstone of this
advantage was our substantial reduction in the federal corporate income tax rate and the elimination of the federal capital tax. We have been steadily lowering
our federal corporate tax rate, from 22 per cent in 2007 to 15 per cent as of this coming Jan. 1. At the same time, we have encouraged the provincial governments in Canada to follow suit and lower their corporate tax rates to 10 per cent, establishing a combined federal-provincial tax rate of 25 per cent. This is helping to brand Canada as a highly competitive tax jurisdiction for business investment. Most of the provinces are on track to accomplish this. As well, we introduced
incentives to encourage provinces to eliminate their general capital taxes and by 2012 all such capital taxes will have disappeared. These and other tax changes have allowed Canada to achieve an overall tax rate on new business investment that is substantially lower than that in any other G7 country.