Thank you, Mr. Chairman, and good afternoon, ladies and gentlemen.
My name is Ward Griffin, and I am here today in my position as immediate past chairman of the Canadian Printing Industries Association. I'm also president of the Lowe-Martin Group, headquartered here in Ottawa.
The CPIA represents the many companies in the pre-press, print, bindery, and allied industries. Commercial printing is Canada's largest manufacturing industry, measured by number of establishments. The industry's 5,800 firms employ 84,000 people and contribute $12 billion to the economy, including $2 billion in exports.
Smaller firms dominate the industry. Printing establishments are located in virtually every community of any size. They provide stable career employment and economic activity in all parts of Canada.
Two themes dominate this submission. First, the Canadian economy is slowing down, meaning that a pro-business budget is necessary. Second, the budget must take action to improve the international competitiveness of Canadian manufacturers. The Canadian Printing Industries Association believes that these issues are more pressing than the questions asked by the standing committee about choosing between tax reductions and more program spending.
For some years, the CPIA has described problems associated with the capital cost allowance treatment of computer-like equipment used in our industry. Such equipment becomes technologically obsolete long before it wears out. It must be replaced prior to being fully depreciated, creating additional costs for printers already having trouble competing against non-Canadian firms. The CCA rate needs to be accelerated to reflect the true nature of our assets.
We also believe companies eligible for the small business rate should be able to expense data processing and digital equipment up to $45,000 in the year of acquisition. There are no two measures the standing committee could embrace that would have a more positive impact on the printing industry than to permit accelerated write-offs to computer-like equipment and to allow this expensing.
A 2004 report done for the CPIA by Ernst & Young entitled “Capital Cost Allowance for the Canadian Printing Industry” was presented to Finance Canada and included recommendations for improvement of the CCA system. The report made clear that improved productivity, achieved through increased and accelerated investment in physical assets, would have a positive impact on the growth of the Canadian economy, not just the printing industry. The report also observed that such measures would result in increased government revenue in the long run.
This wider benefit should be regarded by the standing committee as significant. The Canadian economy is slowing down. Adjustments to the CCA would therefore be well received by Canadian manufacturers who are generally seeking stimulus to spur investments.
It should also be noted that Canadian-based manufacturers are being faced with a capital cost allowance system in the United States that provides their manufacturers with a competitive advantage in both domestic and international trade.
Our submission also identifies three other non-tax measures that would improve the competitiveness of our industry. First, ensure a positive climate primarily in the U.S. for Canadian exporters; second, accelerate the process of attracting skilled immigrants to Canada and integrating them into the workplace; and finally, discontinue subsidies to Canadian publishers that continue to have their books printed outside of Canada.
Three measures that would improve the competitiveness of our industry have also been advanced in our brief. They include, first, implement broadly based and significant personal income tax relief; second, eliminate the corporate surtax for all businesses in 2008 and accelerate the reduction in the general corporate rate; and third, accelerate reductions in the small business rate.
Another issue raised in our brief is the need for an approach to taxing gasoline and diesel fuel that would mitigate the impact of rapidly rising prices.
Thank you for your attention to my remarks. I look forward to discussing them further with you shortly.