Entries in tax system (1)


Business barriers or opportunity for innovation?

The Canadian Chamber of Commerce recently released its 2015 version of its Barriers to Competitiveness for Canadian business.  As the issues are identified, recommendations made, and any progress locally is highlighted, the barriers become more like opportunities - opportunities for change and hopefully, improvement in the business climate.  

The goal of the report is simple, “identify and implement real, tangible solutions to break down the barriers to our competitiveness” as laid out by Perrin Beatty, Canadian Chamber of Commerce President. “And create more opportunities and greater prosperity for Canadian businesses and families.”  

As you’ll see in reading this article there are a number of local initiatives, projects, and organizations such as the Peterborough Chamber of Commerce that are working to turn these current barriers into opportunities.  

Silos in skills development

There are shortages and high demand forecast in a wide range of occupations and Canada is not producing enough graduates with the skills needed for the economy.  The Temporary Foreign Worker Program no longer presents an effective path to meet short-term labour shortages.  As a result stronger efforts are needed to coordinate between education and employment with the help of educators, government and employers (Canadian Chamber, 2015).

To officially break down the silos will require a new way of thinking.  Many have suggested changing the education system to reflect programs and outcomes the economy needs.  Germany has taken this type of approach.  This sort of change also requires a lot of labour market information and data.  The local Workforce Development Board is working on gathering and disseminating such information for the Peterborough area.  The Labour Market Gateway is the start of hard concrete data to inform organizations, educators and employers.  

Entrepreneurs lack capital for Canada’s fastest-growing companies

Access to capital is one of the most critical determinants of competitiveness, especially for start-ups and companies moving from innovation to commercialization.  Consultations with fast growing companies in 2014 revealed that one of the biggest hurdles is securing capital to take their companies to the next level.  Canada’s venture capital (VC) industry is still small compared to larger VC industries in the U.S. (Canadian Chamber, 2015).

Through the actions of a number of organizations from the Greater Peterborough Innovation Cluster to Peterborough Economic Development to the Peterborough Chamber of Commerce (close to half of the
membership is made up of small and medium enterprises) Peterborough has self-identified that entrepreneurship is an area of focus.The local activity in this area is evident from the growth of the Bears’ Lair entrepreneurial competition, the entrepreneurial focus of the Chamber’s 2015 Business Summit, the very active Peterborough Regional Angel Network, and the Conference Board of Canada identifying that the area has the highest number of immigrant entrepreneurs.   One of the main reasons offered by the Canadian Chamber of Commerce as to why the VC industry is small is that traditionally Canadians are risk averse.  And yet as each of these activities plays out or receives attention we are helping to knock down and chip away at this barrier.

Canada’s tax system is too complex and costly

The country over-relies on income and profit taxes rather than on taxes on consumption, which are relatively easy to collect and are least harmful to growth.  Canada must undertake a comprehensive review of its tax system with the aim of reducing its complexity and improving the way it raises tax revenue.  To that end one of the recommendations is that the income threshold for the small business tax rate be increased to $1,000,000 from $500,000 (Canadian Chamber, 2015).

Canadian trade is constrained by infrastructure deficiencies 

Public investment in infrastructure has not kept up with Canada’s economic needs and now monetary investment needs far exceed the availability of public funds.  To see the infrastructure system back to a level to support prosperity will require ongoing support from all levels of government, active engagement with private stakeholders and a greater appreciation of the opportunities that a modern public infrastructure could provide (Canadian Chamber, 2015). 

Last summer, the provincial government announced that the Ontario Community Infrastructure Fund will be a permanent source of funding for roads, bridges, etc. in small and rural communities.  This is exactly the type of commitment from government that is needed.  However, as the Canadian Chamber and Ontario Chamber have said on this topic, it’s not the only type.  We also need the political will and foresight to recognize a project that will open up opportunities to an area, for example, pushing the 407 out to the 115 or a rail link between Peterborough and the GTA that avoids the 401 corridor.  

Canada is uncompetitive in the world’s tourism sector

Canada has slid from the seventh largest tourist destination in the world to the 18th. The travel and tourism industry is critical to its economy (Canadian Chamber, 2015).

Travel and tourism are a large part of the Peterborough economy, with over 1,000 businesses involved in the industry, employing over 13,000 people (http://tiac.travel/Tourism_Jobs.html).  An opportunity to improve the awareness of the area to a broader audience will be through the Travel Media Association of Canada Conference which will be held in Peterborough and the Kawarthas in June. 

Innovation rate is not sufficient to help manufacturing rebound

A modern manufacturing win is usually the result of a strong commitment to innovation, yet this continues to be a challenge.  Canada is currently ranked 22nd by the World Economic Forum for its capacity for innovation.  The innovation policy framework that exists in Canada is not sufficient to overcome a number of serious barriers for the manufacturing sector (Canadian Chamber, 2015). 

With the commitment to the Innovation Cluster in Peterborough and continued success of an advanced manufacturing sector that has embraced innovation, Peterborough is setting a precedent. The challenges are by no means small, but the help of the federal government is paramount. Manufacturing and innovation are not in isolation from many of the other Top 10 issues in the list. In fact the issue has links to the concerns in skills development, entrepreneurship, the Canadian tax system and infrastructure.  Allowing the companies to have the best climate under which to innovate is paramount.

This discussion centres on issues that have both a federal and local scope.  The goal of the Canadian Chamber report was to “find tangible solutions and opportunities that will lead to prosperity for Canadian businesses and families”.  Doing so will require innovation – a new way of thinking about an on-going challenge, but most importantly creating local solutions.

Comment through the "Peterborough Chamber" group of LinkedIn.