Chemistry Industry Association of Canada

March 19, 2007 17:30 ET

CCPA: Budget Good for Communities Affected by Manufacturing Closures

OTTAWA, ONTARIO--(CCNMatthews - March 19, 2007) - Canada's Chemical Producers today praised the Federal Government for providing tax relief to the manufacturing sector in its 2007 budget, by modifying its capital cost allowance on new investments in this critical sector of the Canadian economy.

Through this budget announcement, chemical producers - and other manufacturers - will be able to write off capital expenditures over a two year period (i.e., 50% using the straight-line depreciation method) as opposed to the average write off of 11 years in the current 30% declining balance approach, compared to 4 or 5 years in the United States. Right now the high Canadian dollar, high energy costs and competition from China and India means that many companies do not have the cash flow to invest in upgrading plants or improving environmental performance.

"This budget is good for Canadians; it helps those small and large communities struggling with manufacturing losses," said Richard Paton, President of the Canadian Chemical Producers' Association (CCPA). "For chemical producers, this announcement means new plants will be written off in shorter time frames and will represent a major difference in cash flow for companies. This change in tax policy will stimulate new investment decisions, make chemical producers more competitive compared to the U.S., and help them compete with rising investments in growing markets like Asia and the Middle East," added Mr. Paton.

The changes in capital cost allowance also complements the government's regulatory approach for industry on environmental issues, providing more flexibility for industry to invest in new capital projects including new technologies that would result in further reductions of emissions affecting both greenhouse gases and clean air.

The changes announced today reflect recommendations made by members from the House of Commons Industry Committee in a report endorsed by all parties. The Committee unanimously agreed with the Canadian Manufacturing Coalition that changes in business taxation and smart regulation are necessary to encourage investments in new technology, innovation, and skills training.

CCPA represents 70 member-companies and Responsible Care® Partners with more than 200 basic chemical and resin manufacturing sites across Canada, accounting for approximately 90 per cent of basic chemical and resin manufacturing operations in Canada. Together, these companies generate revenues of more than $26 billion annually, and invest $1 billion annually on capital costs. The goal of Canada's chemical producers is to be the most successful resource up graders in the world, both economically and environmentally.

Contact Information

  • CCPA
    Michael Bourque
    Vice President Public Affairs
    613-237-6215 ext. 225
    or
    CCPA
    Julien Lavoie
    Manager, Communications
    613-237-6215 ext. 239
    www.ccpa.ca