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Op-ed: It’s time for BC to go forward, not backwards, on tax policy

Published by Stephanie Brooks on June 19, 2012

By Jayson Myers, President & CEO, Canadian Manufacturers & Exporters

The Vancouver Canucks can teach us a lot about what it takes to succeed in business: a strong work ethic, top-to-bottom talent, leadership – even a little luck. It seems that each year, when the first skate blade hits the ice to mark the start of a new NHL season, the Canucks are already considered to be top contenders. But it takes more than loyal fans and a great team to make a run for the Stanley Cup year after year. It takes a level playing field.

Note, for example, the salary cap. Long before the cap was introduced in 2005, teams with deep pockets – much like the Yankees in baseball – could be as competitive as their bank account allowed. Today, however, small market franchises can now make a big impact. Just consider the likes of Los Angeles, Nashville and Phoenix from the 2012 playoffs.

In Canada, the manufacturing industry shares many parallels. And that ‘level playing field’ – in simpler terms, ‘business conditions’ – is equally as important. Unfortunately for British Columbians, the field is slanted to other jurisdictions across the country and around the globe, as companies face a highly unpredictable and uncompetitive tax regime that drives away investment, deters jobs growth and slows the economy.

Over the past decade, BC manufacturers have been faced with the deepest recession since the Great Depression, a high Canadian dollar, continued protectionist measures in key export markets, soaring input costs and a tightened labour market, just to name a few. Then came the repeal of the Harmonized Sales Tax (HST) and the introduction of the provincial carbon tax to boot. Not exactly business conditions conducive for competing and winning on the world stage.

Few people often remember the vital role that manufacturing plays in the prosperity of BC and the families who live here. Representing roughly 12,000 companies, the industry contributes $13.2 billion to the provincial GDP (8.6 per cent of the total) – more than agriculture, forestry, fishing, hunting, mining, oil and gas, and the utilities sectors combined. Manufacturers also account for three-quarters of value-added exports and more than 42 per cent of all private sector research and development.

In other words, we have a lot of players and a highly productive team. Now we need the support.

On behalf of the 400,000 workers employed by BC manufacturers (who earn collective wages 15 per cent higher than the average for all sectors), Canadian Manufacturers & Exporters (CME) will be presenting its action plan to the BC Expert Panel on Tax later this week. In it, we’ll be making a series of important and timely recommendations focused on investment in this critical sector, including exempting manufacturers from the planned increase in the corporate tax rate, introducing an input tax credit to offset the repeal of the HST, and conducting an impact assessment of the carbon tax on BC industry. To drive innovation, we will also be calling for significant improvements to the research and development tax credit program to make it more competitive with other provinces.

The time to go forward, not backwards, on tax policy is now. Today, BC has a significant opportunity to transform and expand its economy through more than $500 billion-worth of major infrastructure projects that will kick-start across the country in the next 10 years – projects like natural resource development and shipbuilding. To maximize the value of these opportunities, we must create world-class upstream and downstream value-added manufacturing, services and technology supply chains. While these supply chains can – and will – be developed anywhere in the world, our role in industry and government is to implement policies and programs that nurture investment and innovation domestically to support the high standard of living we all expect and enjoy.

Leadership makes the difference. And, together, we can manufacture a prosperous future for the next generation of British Columbians.

 

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