CAPC Calls For Auto Tax Breaks In Canada

by Mike Godfrey, Tax-News.com, Washington

18 December 2002

The Canadian Automotive Partnership Council (CAPC) has called for tax incentives in order to encourage greater investment in the industry by international vehicle and parts manufacturers.

According to a report in the Globe and Mail on Tuesday, the investment and fiscal committee of the industry group put forward several proposals, including the elimination of the large corporations tax and the capital tax, the creation of a 20% tax credit for spending on new machinery and equipment, and the provision of credits for automotive research and development (R&D) activities.

The CAPC also called for tax credits for companies within the automobile industry which retrofit their places of manufacture in order to meet the federal government's requirements under the Kyoto Treaty, for example by switching from hydraulic to electric robots in order to reduce carbon dioxide emissions.

However, the Globe and Mail observed that: 'It's not clear how much it would cost the federal government to make all the changes suggested. The large corporations tax alone provides Ottowa with about $1.3 billion in revenue annually.'

The CAPC was established earlier this year by Canadian Industry Ministry, Allan Rock, and comprises the heads of the five automobile manufacturers with operations in Canada, CEOs from several parts making companies, Ontario Enterprise Minister, Jim Flaherty, and Quebec Finance Minister, Pauline Marois.

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