News
Canada may have hit its long-awaited electric vehicle turning point – CBC News
Electric car advocates are waiting to see spending details in this week’s federal budget, but for the first time, pro-EV business leaders and economists are expressing new optimism that Canada’s move away from internal combustion vehicles may have reached a turning point.
After years of excuses, there are signs that a conjunction of forces is pushing the country into a technological and social revolution that has been compared to going from horse to automobile and will bring affordable electric cars and trucks to roads and parking spaces across Canada.
High gasoline prices, a gradual increase in the price of carbon and a request by European powers for the world to use less fossil fuels to break Russian leader Vladimir Putin’s grip on their economies, are pushing us in that direction. A series of technological developments that have made electric vehicles not just as good as internal combustion vehicles but better and cheaper to run have helped make it possible.
Now, if only drivers ready to make the switch could find one on the lot to buy.
Missing piece of the puzzle
According to the founder of Canadian media start-up Electric Autonomy, Nino di Cara, the only missing piece of the puzzle is that automotive manufacturers and dealerships simply haven’t been stocking and selling enough EVs.
“There is already a huge amount of consumer interest and demand,” said di Cara in a phone interview last week.
As gas prices soar there have been many reports of surging orders for electrics that the industry has not been able to satisfy. But di Cara notes that it is not a recent problem.
Germany’s Economy Minister: “You are helping Germany, you are helping Ukraine, when you reduce your use of gas, or energy in general.”<a href=”https://t.co/3qw1yw8In3”>pic.twitter.com/3qw1yw8In3</a>
—@marceldirsus
As I reported myself well before the recent supply chain headaches, despite repeatedly prompting that I was looking for a really fuel-efficient car, the salesman at a local lot did not mention the hybrids or electrics the company sold. And when asked directly, he was discouraging, saying they were very expensive and hard to get. What kind of salesman discourages you from buying something expensive?
Moving EVs off the lot
The new federal plan is intended to solve that reluctance, insisting that in order to sell internal combustion vehicles, salespeople must also move a certain percentage of zero-emission vehicles (ZEVs) off the lot as well.
The scheme has been proven to work, not just in California, a leader in what’s called the ZEV mandate, but also in British Columbia and Quebec where sales are more than triple the rate in Ontario and more than 10 times EV sales in Saskatchewan. (B.C. and Quebec also offer higher rebates.)
In an extensive CBC interview last week, industry representative Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, raised many of the standard industry concerns. Making electrics is expensive. Charging networks are not yet complete. Government tax incentives are too low.
WATCH | More charging stations, incentives needed to speed EV switch:
Advocates say Canada’s climate plan needs significantly more investment in providing enough charging stations and incentives to spur consumer demand for electric vehicles. 2:02
Clearly there has been a strong business case for most car makers to sell as few electric cars as possible. Although he later changed his position, the late head of Fiat Chrysler, Canadian Sergio Marchionne, once begged customers not to buy the company’s electrics because he said he lost money on every one the company sold. As he complained in 2014, in order to sell the cars as the government required, he had to lower the price far below the additional cost of the EV technology that went into them.
Level playing field
As a businessman himself, Nino di Cara is sympathetic to the challenges faced by an automotive industry facing radical changes that don’t pay off in the short run.
“From an automaker point of view, it is quite understandable, you prefer not to have those mandates and requirements to sell a certain number of vehicles,” said the Toronto-based entrepreneur, who came to Canada from Britain 15 years ago after a successful career in publishing.
But he said having standardized rules in place for every manufacturer levels the playing field for competing Canadian dealerships.
“It’s no longer a question of EVs when, it’s now just a question of how,” said di Cara.
He pointed out that when the world switched from horse power to oil power, there was almost no oil, and yet in a matter of years businesses learned to drill miles underground and made a fortune doing it. Rather than waiting for charging station networks to be complete or having a stock of battery minerals in hand, those industries will grow in tandem, earning profits in the process.
“Sometimes when industry pushes back on a policy like this it almost sounds like they don’t understand the market,” said Mark Jaccard, a professor of sustainable energy at Vancouver’s Simon Fraser University in a phone call last week.
Dragging their feet
Jaccard, often described as the architect of British Columbia’s groundbreaking carbon tax under the right-leaning provincial Liberal government, takes a market-friendly stance on what he sees as the essential move away from fossil fuels. But he has been critical of the automotive industry for unnecessary foot-dragging in a transition that they will find enormously profitable.
“Unfortunately, the auto industry keeps convincing governments that an ambitious transition to ZEVs is impossible,” wrote Jaccard last October predicting this week’s budget move toward compulsory EV sales.
Jaccard said he thinks that the country has reached a turning point where consumers and the industry are both finally on the path to phasing out fossil fuel vehicles. And he said the evidence can be seen in B.C., where EV sales have already exceeded the provincial 10 per cent mandate, with the province upping compulsory ZEV sales to 26 per cent by 2026 and 90 per cent by 2030, well ahead of federal targets.
But he said that with the federal Canada-wide target at 20 per cent by 2026, even in the case of the election of a pro-fossil fuel government — for instance, after the Liberal-NDP agreement ends in 2025 — it will make the process hard to stop. He compares it to the shutdown of Ontario’s coal plants. Even after the election of the Ford government, it was impossible to reverse course.
Jaccard also said that since the mandate is based on number of cars sold — not dollar value — auto retailers will be motivated to pull down the price of cheaper models at first so that they can continue to sell more profitable high-end gas guzzlers.
New research last week from Clean Energy Canada comparing EVs with their internal combustion equivalents insists that buying an electric car already saves a consumer a minimum of $15,000 over the life of a car.
From concept to business reality
Electric Autonomy’s di Cara said that besides egging on car makers, the transition will cause a new flood of entrepreneurial businesses to serve the industry similar to his own start-up, an EV-based online media venture. One of the company’s recent projects was a challenge to architects to create the EV equivalent of gas stations.
The winning design by Scottish architect James Silvester, used to illustrate this story, will actually be turned into a reality in British Columbia by service station company Parkland, one of the sponsors of the competition.
So is this latest federal move the watershed moment when Canada can switch everyone away from fossil fuel vehicles? Di Cara is hesitant to call it a sure thing.
“I will only believe in the watershed moment when vehicles end up being sold and they are in drivers hands,” said di Cara. “I think this is absolutely an enormous step in the right direction.”
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More money will land in the pockets of Canadian families on Friday for the latest Canada Child Benefit (CCB) installment.
The federal government program helps low and middle-income families struggling with the soaring cost of raising a child.
Canadian citizens, permanent residents, or refugees who are the primary caregivers for children under 18 years old are eligible for the program, introduced in 2016.
The non-taxable monthly payments are based on a family’s net income and how many children they have. Families that have an adjusted net income under $34,863 will receive the maximum amount per child.
For a child under six years old, an applicant can annually receive up to $7,437 per child, and up to $6,275 per child for kids between the ages of six through 17.
That translates to up to $619.75 per month for the younger cohort and $522.91 per month for the older group.
The benefit is recalculated every July and most recently increased 6.3 per cent in order to adjust to the rate of inflation, and cost of living.
To apply, an applicant can submit through a child’s birth registration, complete an online form or mail in an application to a tax centre.
The next payment date will take place on May 17.
News
Capital gains tax change draws ire from some Canadian entrepreneurs worried it will worsen brain drain – CBC.ca
A chorus of Canadian entrepreneurs and investors is blasting the federal government’s budget for expanding a tax on the rich. They say it will lead to brain drain and further degrade Canada’s already poor productivity.
In the 2024 budget unveiled Tuesday, Finance Minister Chrystia Freeland said the government would increase the inclusion rate of the capital gains tax from 50 per cent to 67 per cent for businesses and trusts, generating an estimated $19 billion in new revenue.
Capital gains are the profits that individuals or businesses make from selling an asset — like a stock or a second home. Individuals are subject to the new changes on any profits over $250,000.
The government estimates that the changes would impact 40,000 individuals (or 0.13 per cent of Canadians in any given year) and 307,000 companies in Canada.
However, some members of the business community say that expanding the taxable amount will devastate productivity, investment and entrepreneurship in Canada, and might even compel some of the country’s talent and startups to take their business elsewhere.
Finance Minister Chrystia Freeland unveiled the government’s 2024 federal budget, with spending targeted at young voters and a plan to raise capital gains taxes for some of the wealthiest Canadians.
Benjamin Bergen, president of the Council of Canadian Innovators (CCI), said the capital gains tax has overshadowed parts of the federal budget that the business community would otherwise be excited about.
“There were definitely some other stars in the budget that were interesting,” he said. “However, the … capital gains piece really is the sun, and it’s daylight. So this is really the only thing that innovators can see.”
The CCI has written and is circulating an open letter signed by more than 1,000 people in the Canadian business community to Trudeau’s government asking it to scrap the tax change.
Shopify CEO Tobi Lütke and president Harley Finkelstein also weighed in on the proposed hike on X, formerly known as Twitter.
We need to be doing everything we can to turn Canada into the best place for entrepreneurs to build 🇨🇦<br><br>What’s proposed in the federal budget will do the complete opposite. Innovators and entrepreneurs will suffer and their success will be penalized — this is not a wealth tax,…
—@harleyf
Former finance minister Bill Morneau said his successor’s budget disincentivizes businesses from investing in the country’s innovation sector: “It’s probably very troubling for many investors.”
Canada’s productivity — a measure that compares economic output to hours worked — has been relatively poor for decades. It underperforms against the OECD average and against several other G7 countries, including the U.S., Germany, U.K. and Japan, on the measure.
Bank of Canada senior deputy governor Carolyn Rogers sounded the alarm on Canada’s lagging productivity in a speech last month, saying the country’s need to increase the rate had reached emergency levels, following one of the weakest years for the economy in recent memory.
The government said it was proposing the tax change to make life more affordable for younger generations and fund efforts to boost housing supply — and that it would support productivity growth.
A challenge for investors, founders and workers
The change could have a chilling effect for several reasons, with companies already struggling to access funding in a high interest rate environment, said Bergen.
He questioned whether investors will want to fund Canadian companies if the government’s taxation policies make it difficult for those firms to grow — and whether founders might just pack up.
The expanded inclusion rate “is just one of the other potential concerns that firms are going to have as they’re looking to grow their companies.”
He said the rejigged tax is also an affront to high-skilled workers from low-innovation sectors who might have taken the risk of joining a startup for the opportunity, even taking a lower wage on the chance that a firm’s stock options grow in value.
But Lindsay Tedds, an associate economics professor at the University of Calgary, said the tax change is one of the most misunderstood parts of the federal budget — and that its impact on the country’s talent has been overstated.
“This is not a major innovation-biting tax change treatment,” Tedds said. “In fact, when you talk to real grassroots entrepreneurs that are setting up businesses, tax rates do not come into their decision.”
As for productivity, Tedds said Canadians might see improvements in the long run “to the degree that some of our productivity problems are driven by stresses like housing affordability, access to child care, things like that.”
‘One foot on the gas, one foot on the brake’
Some say the government is sending mixed messages to entrepreneurs by touting tailored tax breaks — like the Canada Entrepreneurs’ Incentive, which reduces the capital gains inclusion rate to 33 per cent on a lifetime maximum of $2 million — while introducing measures they say would dampen investment and innovation.
“They seem to have one foot on the gas, one foot on the brake on the very same file,” said Dan Kelly, president of the Canadian Federation of Independent Business.
Some business groups are worried that new capital gains tax changes could hurt economic growth. But according to Small Business Minister Rechie Valdez, most Canadians won’t be impacted by that change — and it’s a move to create fairness.
A founder may be able to sell their successful company with a lower capital gains treatment than otherwise possible, he said.
“At the same time, though, big chunks of it may be subject to a higher rate of capital gains inclusion.”
Selling a company can fund an individual’s retirement, he said, which is why it’s one of the first things founders consider when they think about capital gains.
Mainstreet NS7:03Ottawa is proposing a hike to capital gains tax. What does that mean?
Tuesday’s federal budget includes nearly $53 billion in new spending over the next five years with a clear focus on affordability and housing. To help pay for some of that new spending, Ottawa is proposing a hike to the capital gains tax. Moshe Lander, an economics lecturer at Concordia University, joins host Jeff Douglas to explain.
Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, says he was disappointed by the change — and that it sends the wrong message to Canadian industries like his own.
He wants to see the government commit to more tax credit proposals like the Canada Carbon Rebate for Small Businesses, which he said would incentivize business owners to stay and help make Canada competitive with the U.S.
“We’ve had a lot of difficulties attracting investment over the years. I don’t think this will make it any better.”
Tech titan says change will only impact richest of the rich
Toronto tech entrepreneur Ali Asaria will be one of those subject to the expanded capital gains inclusion rate — but he says it’s only fair.
“It’s going to really affect the richest of the rich people,” Asaria, CEO of open source platform Transformer Lab and founder of well.ca, told CBC News.
“The capital gains exemption is probably the largest tax break that I’ve ever received in my life,” he said. “So I know a lot about what that benefit can look like, but I’ve also always felt like it was probably one of the most unfair parts of the tax code today.”
While Asaria said Canada needs to continue encouraging talent to take risks and build companies in the country, taxation policies aren’t the most major problem.
“I think that the biggest central issue to the reason why people will leave Canada is bigger issues, like housing,” he said.
“How do we make it easier to live in Canada so that we can all invest in ourselves and invest in our companies? That’s a more important question than, ‘How do we help the top 0.13 per cent of Canadians make more money?'”
More money will land in the pockets of Canadian families on Friday for the latest Canada Child Benefit (CCB) installment.
The federal government program helps low and middle-income families struggling with the soaring cost of raising a child.
Canadian citizens, permanent residents, or refugees who are the primary caregivers for children under 18 years old are eligible for the program, introduced in 2016.
The non-taxable monthly payments are based on a family’s net income and how many children they have. Families that have an adjusted net income under $34,863 will receive the maximum amount per child.
For a child under six years old, an applicant can annually receive up to $7,437 per child, and up to $6,275 per child for kids between the ages of six through 17.
That translates to up to $619.75 per month for the younger cohort and $522.91 per month for the older group.
The benefit is recalculated every July and most recently increased 6.3 per cent in order to adjust to the rate of inflation, and cost of living.
To apply, an applicant can submit through a child’s birth registration, complete an online form or mail in an application to a tax centre.
The next payment date will take place on May 17.
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