Federal budget 2023: what matters to the auto care sector

On March 28, 2023, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, tabled the federal budget. AIA Canada was among a select group of stakeholders invited to the Finance Minister’s Lock Up for an advanced reading of the budget. While a good deal of focus is aimed at proposals around health and dental care, as well as a grocery rebate tax credit, the 2023 federal budget has a number of measures of importance to the Canadian auto care sector. These include announcements on labour, the right to repair, small business and a clean economy.

Labour: investing in workers

Under a section entitled “Investing in Canadian Workers,” the budget references that there will be good jobs in a number of sectors related to green technologies, including mechanics who keep zero-emission vehicles running well.

Budget 2023 proposes:

• To double the maximum employment deduction for tradespeople’s tool expenses to $1,000 to help them invest in the equipment they need. This change would take effect for the 2023 taxation year.
• To invest an additional $625 million in 2023-24 in the Labour Market Transfer Agreements to ensure Canadians continue to have access to the supports they need to get their next job.
• To provide $197.7 million in 2024-25 to the Student Work Placement Program to continue creating quality work-integrated learning opportunities for students through partnerships between employers and post-secondary educational institutions.
• To provide $5.4 million over three years, starting in 2023-24, to Employment and Social Development Canada to ensure that the Work-Sharing Program continues to provide timely support to Canadian workers and businesses.
• Introducing cross-government program effectiveness reviews, led by the President of the Treasury Board. The first review will examine skills training and youth programming, to determine whether improvements can be made to help more Canadians develop the skills and receive the work experience they need to have successful careers.

The government also announced that by 2025, Canada will welcome 500,000 new permanent residents each year— the majority of whom will be skilled workers who will help address the labour shortages that so many Canadian businesses are experiencing today.

Right to repair

Under a section entitled “Making Life More Affordable”, Budget 2023 announces that the government will work to implement a right to repair, aimed at introducing a targeted framework for home appliances and electronics in 2024.

The government will launch consultations this summer, including on the right to repair and the interoperability of farming equipment, and work closely with provinces and territories to advance the implementation of a right to repair.

While this is a step in the right direction, there is no mention of vehicle repair as part of the right to repair provisions in the budget. Nevertheless, an important precedent has been set and we are in alignment with the government on the need to address consumer fairness and affordability. This policy move has opened the door, and AIA Canada is actively working with government to ensure the automotive industry is a critical pillar of these discussions.

Support for small businesses: targeting credit card fees

Small businesses will benefit from commitments made by Visa and Mastercard to lower fees for small businesses, while protecting rewards points for Canadian consumers offered by Canada’s large banks.

More than 90 per cent of credit card-accepting businesses will see their interchange fees reduced by up to 27 per cent from the existing weighted average rate. These reductions are expected to save eligible small businesses in Canada approximately $1 billion over five years.

Small businesses will also benefit from free access to online fraud and cyber security resources from Visa and Mastercard to help them grow their online sales, while preventing fraud and chargebacks.

A clean economy: prioritizing electric vehicles and batteries

Introduced in Budget 2021 with the goal of encouraging investment in zero-emission technologies in Canada, the government brought in a reduced corporate income tax rates for zero-emission technology manufacturers. These rates—4.5 per cent for small businesses and 7.5 per cent for other businesses—are currently scheduled to expire beginning in 2032, subject to a phase-out starting in 2029.

Budget 2023 proposes to extend the availability of these reduced rates by another three years, such that the reduced tax rates would no longer be in effect for taxation years starting after 2034, subject to a phase-out starting in 2032.

With new opportunities ahead, extending this support is important to ensure businesses have the runway they need to innovate and produce zero-emission technologies.

AIA Canada remains committed to engaging with government on the issues that matter most to the auto care industry. Over the coming days, we will continue our analysis of the above-mentioned measures to determine any further impacts for our members.