Canada's chemical industry lauds budget measures ahead of vote

23 March 2011 14:13  [Source: ICIS news]

TORONTO (ICIS)--Canada’s chemical industry is welcoming key measures in the country’s latest federal budget, but commentators said on Wednesday that the government will likely fall as opposition parties are not supporting the budget.

The Conservative minority government’s 2011 budget includes an extension, until 2013, of accelerated capital cost allowance, a measure that allows chemical and other manufacturers to defer the taxes while new facilities are built or machinery is installed.

Richard Paton, the president of Chemistry Industry Association of Canada (CIAC), an industry trade group, said the extension was good news for manufacturers.

Manufacturing was hit hard during the recession and still faces challenges from a high Canadian dollar against the US dollar as well as a slow recovery, Paton said.

As such, accelerated capital cost allowance would help to attract new investment in Canada’s chemicals and other manufacturing sectors, and make manufacturing in Canada more competitive, he said.

Paton also said the chemical industry welcomes the government’s commitment to spending almost Canadian dollar (C$) 200m ($204m) over the next two years on implementing Canada’s Chemicals Management Plan, which is aimed at controlling hazardous chemicals.

However, most political commentators said the budget would not pass a vote in the country's parliament, expected for next week, as Canada’s three main opposition parties are not supporting it.

That would bring down Prime Minister Stephen Harper’s minority government and trigger a federal election.

Major chemical firms with production facilities in Canada include NOVA Chemicals, Dow Chemical, Shell, MEGlobal, DuPont Canada, LANXESS, Invista and ExxonMobil’s Canadian Imperial Oil affiliate, among others.

($1 = C$0.98)

Read Paul Hodges’ Chemicals and the Economy blog

By: Stefan Baumgarten
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