Ottawa, June 20, 2007
2007-048
The Honourable Jim Flaherty, Minister of Finance, issued the following
statement today on behalf of Canada's New Government at the conclusion
of meetings with his provincial and territorial counterparts:
"Over the last two days, we had very productive discussions on how we
can work together to strengthen Canada's economic union. I'd like to
thank my provincial and territorial colleagues for the frank and
forthright exchange of views.
We began by taking stock of the recent excellent performance of the
Canadian economy.
We are experiencing the second-longest period of economic expansion in
Canadian history, the best job market in a generation, corporate profits
are near record highs, and the financial position of households is strong.
All regions of the country have shared in economic gains, resulting in
very positive fiscal results for all governments. We were also mindful of
the fact that the country continues to face various regional economic
challenges such as the state of the manufacturing sector and labour
shortages.
We also heard from Governor David Dodge of the Bank of Canada on the
outlook for growth and inflation in Canada, including economic and
financial developments, trends, and risks.
Ministers also took this opportunity to commend Governor Dodge for his
successful stewardship of Canada's monetary system over the past six
years and to wish him the best in his future endeavours.
Finance Ministers agreed that ongoing efforts to increase productivity
are required to ensure Canada maintains its competitive advantage and our
standard of living continues to improve. Our long-term economic plan, Advantage
Canada, helped frame the discussion.
Governments have all made substantial progress in the context of Advantage
Canada, including important investments in infrastructure and human
capital. As a result of actions taken in Budget 2007, Canada's marginal
effective tax rate (METR) on new business investment improved from
third-highest in the G7 to third-lowest by 2011. And thanks to measures in
provincial budgets in 2007, supported by the federal government, Canada's
METR will move to second-lowest by 2011. Canada's New Government has
already taken significant steps in its first two budgets to reduce
corporate tax rates, eliminate capital taxes, and improve capital cost
allowance rates for the manufacturing sector.
This does not mean we agreed to be complacent. We will have to continue
to work together to find ways to improve Canada's business tax
structure, including further collaboration in harmonizing tax systems and
building on our joint efforts to eliminate capital taxes. As set out in Advantage
Canada, our goal is to have the lowest effective tax rate on new
business investment in the G7.
We discussed our close collaboration on two important personal tax
initiatives: the Working Income Tax Benefit (WITB), which will improve the
incentives to work for low-income Canadians, and the Registered Disability
Savings Plan (RDSP), which will help parents and others save for the
long-term financial security of a child with a severe disability.
We focussed specifically on the process that the federal government has
put in place to better harmonize the WITB with existing provincial and
territorial programs by allowing for certain province- and
territory-specific changes to the design of the WITB. We also discussed
the importance of collaborating with our colleagues responsible for social
services to ensure that the benefits of the WITB and RDSP are not clawed
back, but are passed on to Canadians to improve their quality of life.
In an effort to strengthen Canada's economic union the Finance
Ministers discussed ways to reduce barriers to
inter-provincial-territorial labour mobility, trade and improving
regulatory efficiency.
Finance Ministers similarly agreed on the need to work in a coordinated
fashion to encourage the efficient production and use of energy and to
make progress on issues related to the environment while maintaining a
strong economy.
We had a productive day and will continue working together to ensure
that the provinces and territories are partners in our national success. I
think these meetings mark a major step in that direction."
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For further information, media may contact:
Chisholm Pothier
Press Secretary
Office of the Minister of Finance
613-996-7861
David Gamble
Media Relations
Department of Finance
613-996-8080
