Budget 2020 recommendations respond to call for low-carbon economy

Among CPA Canada’s pre-budget recommendations is a call for governments and businesses to work together to consider the environmental and societal impacts of their economic endeavours (Shutterstock/wavebreakmedia)

Protect, modernize and strengthen are the themes that resonate in the recent pre-budget recommendations from CPA Canada to the federal government. This year’s theme for pre-budget submissions is accelerating the transition to a low-carbon economy to deal with the climate emergency—a theme set by the House of Commons Standing Committee on Finance. 

“Canadians are looking to leaders in the public and private sectors to confront climate change with solutions that protect their economic prosperity and quality of life,” says Gordon Beal, CPA Canada’s vice-president, research, guidance and support. 

In its submission, released in August, CPA Canada laid out what it believes to be top action-items when mapping out the 2020 federal budget.

1) ALIGN ECONOMY AND ENVIRONMENT

Of these recommendations, a strong emphasis was on aligning the economy with the environment. This includes fulfilling the transition to a low-carbon, climate resilient economy, ensuring governments and businesses, in tandem, consider the environmental and societal impacts of their economic endeavours, and adjust them accordingly. Climate data that can aid business decision-making, it said, should be readily available through a national information centre. 

“Canada needs to map—and commit to—a long-term path in order to maintain forward momentum in addressing climate policy objectives and to entrench the policy certainty that business and investors require,” says Beal. “Failure to adequately transition to a low-carbon, climate-resilient economy—by either political or business leaders—will further erode public trust in the institutions that underpin our society. That is why climate change must be addressed by both government and business, in partnership.”

2) UP TO DIGITAL SPEED

The report also emphasizes, in the digitized era, the need to re-commit to the new Digital Charter, and to modernize legislation to protect privacy and data in circulation, while keeping pace with regulatory environments. Our digital economy also needs to play catch up to other nations around the world, and as recommended by the OECD, by collecting relevant taxes, namely GST/HST, from non-resident vendors operating in country virtually. This will level the playing field and protect the interests of Canada’s small to medium-sized businesses, the backbone of our economy.   

“Data is at the forefront of another disruptive influence—the increasing digitization of global economies,” says Beal. “Technologies such as blockchain, artificial intelligence and data analytics are revolutionizing business, impacting the labour market and raising a variety of ethical and privacy concerns. How we respond to those concerns will impact our economy and Canadians’ level of trust in our society and our institutions.” 

3) TOUGH ON MONEY LAUNDERING

Attempts to thwart money laundering and corporate tax evasion through the new beneficial ownership legislation—which obliges private businesses under the Canada Business Corporations Act (CBCA) to maintain records, including identity and other details, of individuals who have “significant control” over a company—is an important step in increasing transparency.

However, CPA Canada recognizes this as a work in progress, calling for continued efforts to strengthen this system, including establishing coordination and consistency across federal and provincial efforts, working towards the same goal. Furthermore, it calls for a national framework around whistleblowing in both the public and private sectors for reporting misconduct whereby a ‘whistleblower’ will be protected, without fear of reprisal or recrimination. 

“Public trust is also being challenged by another complex issue: money laundering,” says Michele Wood-Tweel, CPA Canada’s vice-president, regulatory affairs. “The laundering of the proceeds of crime in Canada has impacts on the real estate market, on tax revenues, and on the integrity of our financial system and markets. More action to strengthen Canada’s anti-money laundering regime is required to counter this criminal conduct and to ensure our economy and society is protected for the benefit of all Canadians.”

4) PREPARE WORKERS FOR EVOLVING JOB MARKET

As the economy shifts, so too must the Canadian worker. CPA Canada urges the government to continue creating opportunities for Canadians to develop their skillsets, as workplaces transition and diversify, particularly in the areas of energy and big data. Initiatives including the Canada Training Benefit must have clear, measurable objectives and be evaluated regularly to be fully effective.

“One of the reasons people sometimes feel threatened by change is the uncertainty it may create around their own jobs and future prospects,” says Francis Fong, CPA Canada’s chief economist. “That is why ensuring Canadians have the skills needed for the evolving new economy remains such an important issue, especially as Canada’s energy industry transitions to a cleaner future and big data disrupts more occupations and workplaces.”

MOVING FORWARD

Standing by its call for tax reform, CPA Canada continues to advocate for a review of the country’s tax system by an independent expert panel to ensure it meets the demands of the future economy. And Canadians agree. In a recent Nanos research poll, 81 per cent of respondents felt a comprehensive tax review should be priority for government. 

“A comprehensive review of Canada’s tax system is long overdue,” says Bruce Ball, vice-president, taxation for CPA Canada.  “Canadians need to be able to trust that the tax system efficiently provides the benefits they require, that it supports economic growth and job creation, and that it is fair to all Canadians.”

Whatever the goal, the journey getting there requires fiscal responsibility, concludes CPA Canada. With the Bank of Canada identifying climate change as a real risk to the economy earlier this year and the Expert Panel on Sustainable Finance estimating a cost of more than $2 trillion in the next decade to meet our Paris Agreement commitments, the government’s fiscal house must be in order, it adds. 

“Once again, CPA Canada recommends the government balance the budget in the medium term to provide the fiscal stability needed to address the challenges and opportunities of a changing climate and sustainable future,” says Beal. 

FURTHER ANALYSIS

Read CPA Canada’s pre-budget submission in full here.