Ottawa should slash spending by 15 percent and balance its next budget to boost Canada’s productivity and elevate its competitiveness on the international stage, says the Canadian Chamber of Commerce.
The chamber is calling on the federal government to consider cuts that haven’t been seen since former Prime Minister Jean Chretien’s austerity measures in 1995 eliminated 45,000 federal jobs.
Supplementing government spending with increased taxes must also end, the group recommended.
“Our country must stop relying on tax-and-spend policies that undermine innovation and growth to the detriment of both today’s Canadians and future generations,” the group wrote, adding that the government should “return Canada to a balanced budget.”
Finance Minister Chrystia Freeland has said the spending included in Budget 2024 is focused on building more homes, making life more affordable, and creating good jobs.
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“Budget 2024 is a plan to build a Canada that works better for every generation, where younger generations can get ahead, where their hard work pays off, and where they can buy or rent their own home—where everyone has a fair chance at a good middle-class life,” Freeland said in April.
Tax Overhaul
The chamber also urged the federal government to conduct a comprehensive review of the country’s tax system which it said has become fraught with “carve-outs and caveats,” that are “undermining growth by chasing away innovation and investment.”
“Canada needs a simple, fair, and principled tax system that works in the best interests of Canadians, today and tomorrow,” the report said.
Spending and taxes both need to be reined in as Canada’s competitiveness continues to wane, the chamber said, noting that the country’s GDP per capita is the worst among the G7 nations. It fell 1.7 percent per person over the past year.
“In 11 of the last 14 quarters, Canada’s productivity fell. Without productivity gains, Canadians continue to work harder but become poorer, and will be unable to reach their goals,” the report said.
The chamber is also recommending the government modernize Canada’s regulatory framework to increase investment, economic growth, and jobs, reduce internal trade barriers, and allow the reinvestment of capital gains for new housing developments.
