Canada is struggling with stagnant productivity, with negative growth rates in 15 of the last 18 quarters. The Bank of Canada recently described the country’s productivity problem as a national emergency, highlighting lagging investment in machinery, equipment, and intellectual property.
This report examines capital investment trends and projections in Canada. It identifies the key factors influencing small business capital investment decisions, highlights the main investment barriers small and medium-sized enterprises (SMEs) are facing, and estimates the investment surge resulting from a provincial sales tax (PST) exemption in British Columbia, Saskatchewan, and Manitoba. Additionally, it offers key recommendations for provincial and federal governments to encourage increased capital investment by using the fiscal tools at their disposal.