2022 Fall Economic Statement Highlights for RetailNovember 4, 2022
On Thursday, November 3, 2022, the Government of Canada tabled its Fall Economic Statement, a revised look at the state of the country’s finances between federal budgets, as retailers of all sizes are feeling the impacts of high inflation and labour challenges amid forecasts of a potential recession in 2023.
The focus is as one would expect – moderating inflationary pressures and addressing recession risks. There were some notable items for retailers, including:
- Credit Card Fees: The government intends to enter into negotiations with payment card networks, financial institutions, acquirers, payment processors, and businesses to lower credit card transaction fees for small businesses in a manner that does not adversely affect other businesses and protects existing reward points for consumers. The government published draft legislative amendments to the Payment Card Networks Act. Should the industry not come to an agreed solution in the months to come, the government will introduce this legislation at the earliest possible opportunity in the new year and move forward on regulating credit card transaction fees.
RCC applauds the government for its plan to lower credit card transaction fees but this needs to be done for businesses of all sizes. If the government cares about the $10 billion in credit card fees borne by Canadian consumers each year, it will ensure that interchange rates will be lowered across the board, so that consumers see the benefits wherever they choose to shop. Early-stage conversations with the Finance Minister’s Office today indicate that the draft legislation does not discriminate by business size and that Finance does recognize the argument that ensuring interchange reduction more broadly will carry a greater consumer benefit.
- Supply Chains: The government will introduce legislative amendments to update the management and operation of Canadian ports and increase transparency and competitiveness of freight rail. It will also modernize cargo and clearance inspection practices, streamline operating policies and regulatory practices that impact the flow of goods through international gateways, and explore ways to bolster protection and remedies for shippers and service providers due to service disruptions. These are important issues for many of our members and we recently addressed each of them directly at a meeting with Ministers Champagne and Freeland on October 18.
- Labour: The government committed to $1.6B of new funding over 6 years, with $315M ongoing, for processing and settlement of new permanent residents as part of the 2023-25 Immigration Levels Plan, which will bring 500,000 immigrants to Canada. It also committed an additional $50M for 2022-23 to address the current and ongoing application backlog at Immigration, Refugees and Citizenship Canada. The government also proposes to provide $802.1M over 3 years to the Youth Employment and Skills Strategy in an effort to ensure youth, especially those from First Nations and marginalized communities, have access to skills development to find and keep good jobs.
- GST Rebates: As was previously announced, the government recommitted to doubling the GST Credit for six months for low-and modest-income people and families, providing greater flexibility for consumer spending. In the coming weeks, an estimated 11 million Canadians will receive an extra $225 to $467, providing $2.5 billion in additional targeted support.
- Automatic Advance for the Canada Workers Benefit (CWB): The CWB is currently delivered through tax returns, meaning people who receive it need to wait until the tax year is over to receive the support. The government now proposes to provide $4 billion over six years, starting in 2022-23, to automatically issue advance payments to people who qualified for the benefit in the previous year, starting in July 2023 for the 2023 taxation year. This measure would provide up to $714 total for single workers, and $1,231 total for a family.
- Home Improvement: The government committed to introducing a new, refundable Multigenerational Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite for a family member who is a senior or an adult with a disability, starting January 1, 2023.
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Vice-President, Grocery Division and Regulatory Affairs