It is not clear to me how Covid-19 has affected CRA’s processing
of SRED claims. I find that assessing claims seems to be taking about 2 months
now on average, except where a claim has been flagged for intermediate action such
as an FTCAS. Actually, the recent processing time seems perhaps better than the
norm has often been, so it could be that CRA is being less stringent in the
application of review standards. The mandate seems to be to get money into the
hands of business to keep the doors open and the staff employed.
I expect that the distribution of subsidies such as the CEWS
will continue until the next federal election. I think that the government will
simply keep extending the end dates to keep up their popularity. The Liberals
have the electorate’s support now; they don’t want to lose it. Once the
election is done, I think the subsidies will be also. That’s when we will hear
that we can’t afford them.
How much can we afford? Well, the current PM’s dad ran a government
that had some major deficits in the early 80s when interest rates were
excruciatingly high. Adjusting for inflation (and the higher GDP now) I
estimate that it would take a budget deficit of about 300 billion dollars to be
the same burden as a 30 billion dollar deficit 35 years ago. So I think we can
handle the current programs for quite awhile. I don’t say they are a good idea
though. This country needs to strengthen its income statements now more than
its balance sheets. We need economic activity more than savings accounts.
Jason Kenny thinks he can get the needed economic action for
Alberta by lowering provincial corporation income tax rates. I think he’s
wrong. The provincial rate accounts for too small of a portion of the total
corporation income tax bill to make a 2% reduction in the rate meaningful.
Further, the taxation of dividends paid to individual shareholders is so
onerous now that a reduction in the corporation income tax rate is to a large
extent offset by the tax bite out of dividends. Moreover, companies have to
actually have a taxable income for a tax rate reduction to be appealing.
No, what Mr. Kenney ought to do is support the development
of Alberta technology in fields other than oil and gas. Get Alberta
diversified, and do it quickly. Reinstate the provincial SRED credit and the
investor tax credit, and develop fundings for companies developing twenty-first
century industries.
