The federal government will release a fall economic update on Nov. 21 alongside a plan to shore up Canadian competitiveness and prevent investment dollars from flowing south of the border.
Finance Minister Bill Morneau, who made the announcement Thursday, told the House of Commons the economy is still on a roll and the unemployment rate is hovering near a four-decade low.
There are concerns, however, that Canada has lost some of the advantages it once boasted as an investment destination.
Corporate Canada and, more recently, a Senate committee have been pressing Morneau to slash business taxes to keep the country from falling behind after major tax and regulatory reforms in the United States.
But sources with knowledge of Ottawa’s competitiveness plan have said Morneau is looking at targeted measures rather than broad-based corporate tax cuts.
Some have argued in favour of a federal move that would allow all companies to immediately write off new equipment purchases, a change that would help the federal coffer avoid the bigger revenue hit of corporate-tax reductions.
In the U.S., the government has been forced to borrow more cash — and run deeper deficits — in order to cover President Donald Trump’s tax cuts.
“I’ve heard people concerned about the tax measures that Donald Trump’s put into place in the United States… Those are measures we are looking at carefully,” Morneau told reporters Thursday.
“The objective is to make sure that we have the ability for Canadian businesses and international businesses to continue investing in projects in Canada in a way that assures that we have jobs.”
The fall update will also contain fresh projections on economic indicators and on the path of the federal books, which posted a $19-billion deficit last year.
In this year’s federal budget, Morneau projected a shortfall of $18.1 billion for 2018-19, with annual deficits set to shrink each year to $12.3 billion in 2022-23. The projections include annual $3-billion cushions to offset risks.
With less than a year to go before the next federal election, the Conservatives are expected to intensify their criticism of the Liberals for abandoning their 2015 vow to run only modest shortfalls of no more than $10 billion and to eliminate the deficit by 2019.
Prime Minister Justin Trudeau’s Liberals embarked on the new fiscal trajectory after taking office. They defended it by citing a weaker-than-expected economy and a need to invest in the country’s long-term growth.
“This is an opportunity for the finance minister to announce the year in which the budget will be balanced,” said Conservative MP Pierre Poilievre, the party’s parliamentary critic for finance.
“The prime minister said it would be next year, 2019. Instead, we have a deficit now that is two, and maybe even three, times the size that he promised in the last election.”
with files from Terry Pedwell