This afternoon, federal Finance Minister Chrystia Freeland presented an updated accounting of federal finances and the government's economic outlook for the months ahead. This was the first economic and fiscal update since last spring’s federal budget.
In addition to ongoing COVID vaccination and testing investments and continued Lockdown supports, the following targeted investments will be made:
To help strengthen supply chains and address bottlenecks, in 2021-22, the government will launch a new, targeted call for proposals under the National Trade Corridors Fund to assist Canadian ports with the acquisition of cargo storage capacity and other measures to relieve supply chain congestion. The fund will dedicate up to $50 million to support eligible priority projects. Further details on the targeted call for proposals will be announced in the coming weeks.
To encourage small businesses to invest in better ventilation and air filtration to improve indoor air quality, the Government is proposing a temporary Small Businesses Air Quality Improvement Tax Credit. The refundable tax credit would be available to eligible entities in respect of qualifying expenditures attributable to air quality improvements in qualifying locations incurred between September 1, 2021 and December 31, 2022. Eligible entities for a taxation year would include unincorporated sole proprietors and Canadian-controlled private corporations with taxable capital employed in Canada of less than $15 million in the taxation year immediately preceding the taxation year in which the qualifying expenditure is incurred.
To continue to support Canadians working from home due to the pandemic, the government will extend the simplified rules for deducting home office expenses and increase the temporary flat rate to $500 annually. These rules will apply to the 2021 and 2022 tax years.
Minister Freeland also presented a government revenue outlook that included the following commentary:
Goods and Services Tax (GST) revenues are projected to rebound to $42 billion in 2021-22, or 29.6 per cent, from a very weak 2020-21 outcome that was the result of the temporary shutdown of large portions of the retail sector and the reduction in revenues due to the cost of the one-time enhanced GST credit payment. Over the remainder of the projection period, GST revenues are forecast to grow by 4.3 per cent per year, on average, reflecting the outlook for taxable consumption.
Customs import duties are projected to increase 17.3 per cent in 2021-22 with the economic recovery and the reduced demand for remissions of duties on personal protective equipment and other medical goods. Revenue is then estimated to grow at an average annual rate of 6.4 per cent driven by projected growth in imports.
Other excise taxes and duties are expected to increase to $11.6 billion in 2021-22, or 12.7 per cent, as demand recovers, before softening to growth of an average annual rate of 2.0 per cent over the remainder of the projection period, reflecting expected consumption growth of motive fuels and tobacco products, in particular.
You can see the full text of the update here, including extensive commentary on the state of the labour market.