Morneau talks subsidies, budget, small biz and Trump in Calgary

Federal Finance Minister Bill Morneau defended his government’s decision to remove a tax subsidy for oil and gas companies pursuing early well exploration.

“It’s always important to have a balance,” he said at SAIT, noting the Liberals plan to phase out fossil fuel subsidies by 2024. “We believe that we can focus on the sector, get more efficient on the sector, have positive outcomes helping the economy here and across the country.”

Asked about the decision later in the day in front of the Calgary Chamber of Commerce, Morneau said he reviewed many tax measures as they pursue a fairer tax code.

“We didn’t think that it was targeted appropriately and we think there are other things we are doing that are having a very positive impact on the industry, but not through that kind of tax credit approach,” he said.

The man who asked him on the second occasion was Chamber President and CEO Adam Legge, who later told reporters that taking that benefit was another challenge for businesses.

“The other issue is that it was not applicable to the mining sector, it was only applicable to the oil and gas sector,” he said. “Ultimately, it was probably one of those things that didn’t make a heck of a lot of difference to a federal balance sheet in your income statement, so we were disappointed to see that move take place.”

BUDGET

Legge asked Morneau about several other subjects including if there’s a path to a balanced budget.

The finance minister responded by touting Canada as having the lowest net debt to GDP ratio among G7 countries and that the government doesn’t want to miss the opportunity to make investments at a time when it makes sense.

“We’re going to stay down this path, we’re going to do it in a fiscally responsible way,” he said. “As one of the 10 countries in the world that has triple-A credit ratings from all three major credit rating agencies, they are looking at us and saying, you know this is a responsible way for us to make investments in the long term.”

SMALL BUSINESS

Morneau was also asked if there’s a commitment to reducing the small business tax rate, but repeated what the Liberals have said before regarding tax fairness and loopholes.

“We’re much less focused on the rate and more focused on are there some people that have private corporations that are not intended to build their business, but that are being used for other purposes?” he said. “We don’t want to have people that because of a loophole, are finding a way to reduce their tax rate.”

Calgary Conservative MP Tom Kmiec was in the audience and said the small business tax promise has clearly been broken.

“I have people telling me either by email or by Facebook, I am paying more in taxes because my tax return is so much lower,” he said. “What used to be an $8,000 tax return or $4,000 tax return is $1,000 or $500.

“All these tax credits they’ve eliminated over the last little while is a direct impact on middle class Canadians.”

TRUMP

As expected, the finance minister was asked about the relationship between Canada and the United States since President Donald Trump took over in the White House.

He was specifically asked if the U.S. recognizes trade benefits and if Canada has to continue to show their importance.

“Yes to both,” he said. “The Trump Administration has a very clear understanding of the importance of Canada.

“I think all of us who have business relationships with United States organizations, who are perhaps part of a U.S. organization have as a responsibility, talking about the mutual benefits of our trading relationship.”

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