Canada Launches Major Tax Break to Outcompete US

Canada has introduced a major tax deduction aimed at making it an attractive destination for businesses to invest. The 'Productivity Mega Deduction' allows companies to immediately write off the full cost of new capital investments, expanding on last year's productivity super-deduction.

The new measure covers a broader swath of the economy, stretching to 65% of capital spending, including energy, mining, and telecom infrastructure. This is a significant shift from the previous deduction, which only covered around 15% of capital spending concentrated in manufacturing.

Prime Minister Mark Carney said the tax break will make Canada the cheapest place in the developed world to build, with 'your investment dollars going a lot further' compared to other countries.

The government estimates that the deduction could lift annual economic output by around C$22 billion ($15.93 billion) once fully phased in, with an added fiscal cost of near C$36 billion ($25.67 billion) over five years.