Tax Incentives to Boost Clean Growth

Stimulus measures of this kind can boost business investments in machinery and equipment that can lead to a long- run positive impact on productivity and competitiveness.2 However, increased stimulus in the US could come at the cost of capital investment forgoing Canada to move south of the border.3 In order to address concerns over competitiveness, and in response to recommendations from the fede [...] Also included were steps toward regulatory innovation and clean innovation investment.* Expanding the use of ACCA for clean technologies is a two-prong opportunity for Canada: first, to bring down business-related taxes to support competitiveness in light of recent tax policy changes in the US; and second, to do so in a targeted way that helps advance Canada’s clean growth, climate and innovation [...] It is possible and advisable to build upon the recent announcement of 100% first year capital cost allowance for clean energy equipment by broadening the scope of eligible technologies to drive environmental performance across the economy. [...] The increasing the budget said, “the range of energy equipment eligible will be expanded to include newer, environmentally positive activities such as electrical energy from geothermal rate at which and solar energy and the collection of landfill and digester gas”.10 depreciation of a In recent years, the ACCA for clean technology has been expanded to include additional classes of technology. [...] A 2010 study by the US Treasury Department suggested that 100% ACCA could reduce the average cost of capital for new investments by an average of to encourage 75%.14 investment.” Since firms tend to discount the future prospect of cost savings relative to cost savings today, ACCA also acts to provide value to businesses at a low cost.