Budget 2023 Proposed 30% Tax Credit on Clean Manufacturing
The federal government introduced a tax credit for clean manufacturing and clean tech to support a net-zero economy in Budget 2023. The refundable tax credit of 30% is for the cost of investments in new machinery and production equipment and will total $4.5 billion over the duration of five years. The credit is ideal for businesses in the manufacturing sector that want to extract, process, or recycle minerals like cobalt, lithium, nickel, graphite, copper, and other earth elements.
Since 2015, the federal government has taken strides to support a clean economy and an environmentally friendly future. The government has enacted a federal carbon pricing system that puts money back into the pockets of Canadians and allows businesses in the country the flexibility to decide on their own how to reduce their carbon footprint. Eight billion dollars was allocated for a Net Zero Accelerator to support large-scale investments in clean technologies and manufacturing and $4.2 billion for a Low Carbon Economy Fund which aids the installation of emission-reducing tech for Canadian businesses and Indigenous communities.
The tax credit will be a significant budget chapter on a green economy and a clean economy. It will support Canada’s response to the Inflation Reduction Act, which is a package of American tax breaks and programs worth approximately US $400 billion and designed to incite a wholesale economic transition in America.
New Democrats Unhappy with Budget 2023
However, this tax credit was criticized by environmentalists and opposing party, the New Democrats, who claim the credit is a questionable aid to fossil fuel businesses. The Residential Construction Council of Ontario was also displeased with the 2023 Budget. “The budget doesn’t fully address the systemic problems that are delaying construction of much-needed housing. We need to get more housing underway quickly as demand is expected to continue,” said Richard
Lyall, the group’s president. Canada does not have the labour support to build the 3.5 million new homes required to achieve housing affordability by 2030. Lyall explained how the federal government is “nibbling around the edges of the problem by reallocating some money previously earmarked for public housing repairs to new construction.” He was referring to the government’s funding from the National Housing Co-Investment Fund. The fund is designed to support a new stream of construction, as required, to boost the development of new affordable homes for Canadians. Budget 2023 did, however, outline provisions to protect existing mortgages for Canadians that will be outlined in the Financial Consumer Agency of Canada.