In a recent survey conducted by KPMG in Canada, it has come to light that the vast majority of Canadian business leaders are calling for the federal government to expedite the process of making available crucial ‘green’ tax incentives. This push comes in the wake of a pressing need to support businesses in their transition towards a cleaner, more innovative economy. The survey, which took the pulse of 534 small- and medium-sized businesses (SMBs), underscores an urgent call for additional support and incentives to facilitate decarbonization, with a significant 83% of respondents echoing this sentiment.

The findings arrive just as the federal budget is about to be announced, highlighting a critical moment for the government to heed the calls from the business sector. Notably, 80% of the businesses surveyed showed support for federal ‘green’ investments and incentives aimed at attracting foreign companies to Canada, particularly those involved in electric vehicles, batteries, and clean technologies. This reflects a broader recognition of the potential economic benefits that such a move could bring, including job creation, growth, and a boost in manufacturing within the country.

Lucy Iacovelli, Canadian Managing Partner for Tax and Legal at KPMG in Canada, emphasized the importance of these incentives for the business community. She pointed out that in order for Canada to not fall behind major economies like the U.S., the government needs to streamline access to clean energy investment tax credits. These credits are seen as essential for reducing the financial burden associated with emissions reduction and for seizing historic economic opportunities.

Despite the federal government having previously announced five major investment tax credits (ITCs) targeting various aspects of the clean economy, there is a sense of urgency among business leaders for these to be implemented more swiftly. Nearly half of the survey respondents indicated their reliance on federal and provincial government funding and incentive programs to finance emissions reduction efforts. Moreover, a significant proportion of businesses are planning to utilize these clean energy ITCs, highlighting the need for more clarity and faster action on eligibility and implementation.

Dino Infanti, Partner and National Leader for Private Enterprise Tax at KPMG in Canada, also highlighted the challenges faced by SMBs in accessing these incentives. He pointed out the unique barriers related to upfront capital and the complexities of qualifying for tax credits, suggesting that clearer guidelines and a broader eligibility scope could help mitigate these issues.

As global political agendas evolve, the survey revealed a consensus among business leaders that geopolitical shifts could reshape climate change policies, underscoring the importance of Canada’s budget in setting a conducive investment climate. With an overwhelming majority of leaders stressing the need for fiscal responsibility alongside support for climate investment, the message is clear: Canada’s approach to supporting business productivity and innovation needs to balance financial sustainability with the imperative of accelerating the transition to a net-zero economy.