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Government dismissed OECD recommendations on SR&ED: CME

Published by Stephanie Brooks on June 20, 2012

The Organization for Economic Co-operation and Development’s (OECD) 2012 Economic Survey for Canada makes sound recommendations on R&D expenditure that the government should have acknowledged, according to Canadian Manufacturers & Exporters (CME).

The suggestions outlined in last week’s report regarding the Scientific Research & Experimental Development Tax Credit (SR&ED) were not included in the government’s 2012 federal budget.

“The SR&ED tax credit program is one of the reasons there is a lag in R&D spending,” says CME’s Director of Policy for Manufacturing Competitiveness and Innovation, Martin Lavoie. “Canada remains a weaker performer when it comes to business investment in R&D as a result of the imbalance between support to small and larger companies.”

As it was proven in OECD’s report, the business sector devotes “only about one per cent of GDP to R&D, compared with two per cent in the US and more than 2.5 per cent in Japan, Korea and some of the Nordic countries.”

Instead of fixing the imbalance between support to small and large firms under the SR&ED tax credit, the government proposed measures that will widen the gap between small and large firms.

“The government should listen to the OECD when they ask to maintain the SR&ED tax credit,” says Lavoie. “While no one disagrees that more direct support can be an effective tool to make businesses spend more in R&D, it should be done complementary to the current SR&ED tax credit, not at the expense of it.”

CME has been calling on the government to review the proposed changes in light of its impact to business R&D in Canada in a letter sent to the minister of finance last April, which you can read here.

CME President and CEO, Jayson Myers, spoke at the Forum on Canadian Manufacturing Wednesday regarding the outlook for Canadian manufacturers. The media conference comes at a relevant time with the OECD’s recent release of its report.

Found in: cme cmenews

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