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New Economic Analysis Finds Targeted Tax Policy Could Generate Nearly $900 Million in Annual GDP Growth

A new independent economic analysis commissioned by the Railway Association of Canada (RAC), prepared by Giroux Strategies, finds that extending 100% immediate depreciation to Canada’s transportation and warehousing sector could generate nearly $900 million in GDP while crowding in nearly $600 million in additional private-sector investment each year.

As shown in the government’s 2025 Budget, transportation and warehousing is the only major Canadian sector facing a higher marginal effective tax rate than its U.S. counterpart – a competitive disadvantage relative to the US for an industry that supports Canada’s trade and supply chains.

“Canada has set ambitious economic objectives – from strengthening productivity and diversifying trade, to building more resilient supply chains,” said Eric Harvey, President and CEO of the Railway Association of Canada. “Achieving those goals will require supportive policies that encourage businesses to invest in the infrastructure that keeps Canada’s economy moving.”

Key report findings include:

  • Extending 100% immediate depreciation to the transportation and warehousing sector would leverage $591 million in additional private-sector investment each year while increasing Canada’s GDP by $887 million annually.
  • $1.79 in private-sector investment generated for every $1 of net federal fiscal cost.
  • $2.70 in annual GDP growth generated for every $1 of net federal fiscal cost.
  • A total federal fiscal cost of less than 0.1% of federal tax revenues.

“One of the report’s most important findings is that this policy delivers strong economic returns at a relatively modest fiscal cost,” said Jonathan Thibault, Director, Economics, Data and Research at the Railway Association of Canada. “Extending immediate depreciation would be a targeted and fiscally responsible way to translate the government’s productivity, investment and trade objectives into measurable economic benefits.”

The government has already recognized that faster capital cost recovery “boosts productivity and attracts investment.” RAC is calling on the government to build on its Capital Budgeting Framework and Productivity Super-Deduction by extending 100% immediate depreciation to the transportation and warehousing sector.

You can read the full report here:  https://www.railcan.ca/policy-advocacy/immediate-depreciation/