Government Actions Will Improve Our Personal Finances
May 14, 2024
Government incentives to Honda are a win for Ontarians, writes Peter Watson.
Significant financial incentives have been given to Honda to ensure electric cars and batteries are built in Ontario.
Electric cars are the future. There will be direct and indirect financial benefits ranging from jobs created and eventually taxes collected because of this new economic activity.
This is a financial win for Ontarians. It will support a stronger provincial economy which can benefit us all.
In hindsight, I wish the recent federal budget had used this forward-thinking strategy. The government wanted to continue to provide more social programs and needed additional tax revenue.
The result was an increase in taxes paid on capital gains. This is one element of the budget that received the greatest pushback.
Rather than increasing taxes, the government could have employed the same strategy provided to Honda: provide a financial incentive. Lower the tax paid on capital gains. The same way that some of the financial benefits to Honda were because of deferred taxes.
That would encourage entrepreneurs to invest more money in our country. The Bank of Canada recently acknowledged that Canada’s productivity is declining and what is needed is more money spent on new equipment.
Lowering capital gains would create more business activity and the net result would be higher taxes collected. This would be a win-win the same way the investment with Honda is a win-win.
The idea of more creative thinking was supported in recent speech given by Mark Carney. Mr. Carney was the Governor of the Bank of Canada and there is speculation he would like to become the leader of the federal Liberal party.
Mr. Carney said he wished the federal government’s recent budget did more to encourage economic growth.
Competing in the new world requires creative thinking both in government and business. The federal government and our province have succeeded with the incentives to Honda.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com