October 4, 2022
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ECONOMIC IMPACT & RESOURCES
Canadian businesses can charge credit card fees starting Oct. 6
Starting Thursday, businesses in Canada will be able to pass credit card fees on to their customers.
The change is the result of a multimillion-dollar class-action settlement involving Visa and Mastercard over what are known as interchange or swipe fees: the money credit card companies, banks and payment processors collect from merchants with every transaction.
Those fees can range from around one per cent to as much as three per cent for cards, with perks like cash back or loyalty points cutting into business profits.
According to the Canadian Federation of Independent Business, Visa and Mastercard previously restricted merchants’ ability to include fee surcharges or refuse “premium” credit cards with higher costs. Some companies, like Telus, have already announced new credit card processing fees.
The new rule, which allows merchants to pass fees on to consumers, goes into effect on Oct. 6. Merchants are required to provide written notice to Visa and Mastercard. As part of the settlement with the companies, Canadian businesses were also able to claim up to $5,000 in credit card fee rebates.
Bank of Canada governor remains firm on increasing rates
Bank of Canada Governor Tiff Macklem said he remains firmly on an interest rate hiking path because of worries about elevated domestic price pressures and inflation expectations becoming entrenched.
Macklem, in a speech Thursday, painted a picture of an economy that is still “clearly” in excess demand, with businesses facing an extremely tight labor market, wage gains broadening and underlying inflation pressures showing no signs of easing.
Canada two-year benchmark yields hit the highest level since 2007 on his comments, jumping more than 5 basis points to as high as 3.976 per cent. Traders firmed up their bets on a 50-basis-point rate increase at the next policy decision on Sept. 26.
The hawkish comments pour cold water on arguments that the Bank of Canada will be able to diverge from the US Federal Reserve. Before the speech, short-term money markets were betting the Bank of Canada would stop at 4 per cent, about 50 basis points lower than where the Fed is seen heading.
Markets are now pricing in 50-50 odds that Canada’s terminal rate will hit 4.25 per cent. Macklem said that while a recent slowdown in the headline annual reading is “welcome news”, inflation will “not fade away by itself.”
“Simply put, there is more to be done,” Macklem said, according to prepared remarks to the Halifax Chamber of Commerce. “The clear implication is that further interest rate increases are warranted.”
In an apparent signal the central bank doesn’t see itself near the end of its tightening cycle, Macklem said: “We will need additional information before we consider moving to a more finely balanced decision-by-decision approach.” The central bank has already increased borrowing costs by 3 percentage points since March.
More Highlights
Macklem said there’s some evidence global inflationary forces have begun to ease. But price pressures are increasingly becoming domestic and shifting toward services, which means inflation won’t fall without tightening monetary policy, he said.
Officials can’t count on easing global pressure to lower inflation in Canada for three reasons, Macklem said. It will take time for global factors to filter in, the recent depreciation of the Canadian dollar will fuel the cost of US goods, and there’s considerable uncertainty about evolution of supply chains and commodity prices.
The central banker reiterated his commitment to the Bank of Canada’s 2 per cent inflation target, and urged Canadians to make wage and price decisions based on the assumption it will succeed.
Wage growth has risen and continues to broaden, Macklem said, and businesses are passing higher input costs onto consumers.
Higher borrowing costs are beginning to have some effect, particularly in what had been an excessively overheated housing market, he said.
Macklem said the Bank of Canada is now more focused on the trim and median measures of core inflation while it reassesses CPI-common, which has been subject to large revisions.
The longer high inflation persists and the more pervasive it becomes, the greater the risk that it becomes entrenched, he said, again flagging the risk of wage-price spiral.
Survey results of consumer and business expectations due later this month will be important for the bank’s assessment of how expectations have evolved, Macklem said.
Click here for the Governor’s speech
Potential property tax relief for small businesses operating in BC
Small businesses and non-profit organizations paying high property taxes because of future development potential may see some financial relief through new municipal property tax rate flexibility.
Municipalities will have the ability to identify what types of properties or areas in their community are affected by high-density development potential and to provide relief to the commercial properties that need it most by taxing the assessed value of the land at a reduced municipal tax rate.
The tax measure will be in place for the 2023 tax year, replacing the Interim Business Property Tax Relief program introduced in March 2020.
Challenges with split assessments were first identified in B.C. in 2014. The tax change is an outcome of the Property Assessment Strategic Review, launched by the Ministry of Finance in 2019, to fully assess and analyze property tax mitigation strategies for small businesses and find a long-term solution.
The new tax relief tool is permissive and not automatically applied; municipalities and taxing Treaty First Nations can decide whether or not to implement it.
For properties that meet the provincial eligibility criteria, the municipalities can choose which properties receive the relief and set the percentage of land that will be taxed at the lower rate. The tax relief tool will be available to eligible properties for as long as five years.
BC Assessment considers the highest and best use of a property when determining the assessed value, which is a standard commercial appraisal method used throughout North America.
For more information about the changes visit: https://workingforyou.gov.bc.ca/legislation
POLICY UPDATES
Alberta approves enabling regulatory framework for establishing extended producer responsibility
On October 3, 2022, the Alberta government approved the Order in Council enabling regulatory framework for establishing extended producer responsibility.
The final regulation can be accessed here.
The EPR regulation will come into force on November 30, 2022. Transition and implementation is going to take continued effort between government, the oversight organization, and all the impacted stakeholders. Information and fact sheets about the new regulation and the next steps will be published to Alberta.ca shortly at the following link: https://www.alberta.ca/waste-reduction-and-recycling.aspx
OTHER NEWS
Ontario expanding energy efficiency to help businesses
The Ontario government is increasing funding for the province’s energy-efficiency programs by $342 million to support new and expanded programs that will help families and businesses reduce their electricity use.
For more information click here.
Renaming Alberta’s provincial court
Effective April 1, 2023, Alberta’s provincial court will be called the Alberta Court of Justice.
It had previously been called the Court of Queen’s Bench of Alberta. Following the death of Queen Elizabeth II, it was immediately renamed the Court of King’s Bench of Alberta.
New United Conservative Party leader — and Alberta’s next premier — to be announced tonight
Tonight, the United Conservative Party will announce its new leader and Alberta’s 19th premier around 6 p.m. at the BMO Centre in Calgary.
The candidates are:
- Leela Aheer, MLA and former culture minister;
- Brian Jean, former Wildrose Party leader and MLA;
- Todd Loewen, independent MLA and former UCP caucus chair;
- Rajan Sawhney, MLA and former transportation and social services minister;
- Rebecca Schulz, MLA and former children’s services minister;
- Travis Toews, MLA and former finance minister;
- Danielle Smith, former Wildrose party leader.
Internal polling leaked from some camps suggests Danielle Smith is the front-runner, with Kenney-aligned Toews in second place.
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