Good afternoon, Mr. Chairman, distinguished committee members, and fellow presenters.
I am pleased to be here with you today to represent Certified Management Accountants of Canada. CMA Canada is pleased that the committee is considering how to design a tax system that would ensure the prosperity and productivity of individual Canadians and businesses. We have followed your lead. Our submission makes six recommendations focusing on improving Canada’s productivity record, because we believe productivity growth is paramount to improving the living standards of Canadians.
If we're going to ensure that Canadians are in the top rank of living standards globally and that we have the necessary resources available to invest in areas that improve our quality of life, Canada's productivity performance must be improved. Therefore we focus on the three key drivers of productivity--namely, people, physical capital, and innovation.
Education and training play an essential role in driving productivity. We believe that measures need to be taken both at the highest level of education and at the most basic level.
With regard to post-secondary education, we would like to see the government build on its budget 2007 initiative for promoting Canada as a destination of choice for top scholars from around the world. We ask you to consider the idea of a Canadian brand of scholarship program aimed specifically at attracting to Canada the best and the brightest students in the world. Yes, we already participate in the Canada-U.S. Fulbright program, but why not launch a fully Canadian brand of international student scholarship? And once they are here, let's make it easier to encourage gifted foreign students to stay in Canada after they graduate.
Having regard to training, the most basic literacy skills are essential to Canadians' standard of living. Poor literacy skills act as a drag on productivity growth. We would like to see the federal government examine a wide range of policy instruments that promote the acquisition of basic literacy and numeracy skills. This could range from investing directly in such programs, to using the tax system to introduce a tax system change for employers that would provide a credit for approved training expenditures.
Research demonstrates that there is a close link between investing in information and communications technology, or ICT, and increased productivity. Budget 2007 introduced a positive measure with the accelerated capital cost allowance on machinery and equipment acquired by businesses and manufacturing and processing. We would like to see the government build on this initiative by introducing a dedicated ICT adoption tax credit targeted specifically at small and medium-sized enterprises. Such businesses can become Canada's next international success story. An ICT adoption tax credit was recommended by the telecommunications policy review panel, and we believe it has great merit.
In addition, the government said in budget 2007 that it is committed to moving forward with the five provinces that have not yet harmonized their sales tax regimes with the GST. We strongly support this initiative and look forward to learning the steps that the government will be taking to encourage this to happen.
We think of the third key driver of productivity, innovation, in pretty simple terms. It really means doing things smarter. Innovation is reinforced by investing in human and physical capital as well as by encouraging competitive markets and protecting intellectual property rights.
Another key public policy measure to encourage innovation is the scientific research and experimental development tax credit. The SR and ED program is well known in the business community. While this program is generally recognized as being generous, Canada continues to underperform in business research and development.
One change to the program that we think would encourage greater investment in R and D by our business community is to extend the refundability provisions currently available only to the smaller businesses to claimants of all sizes. An alternative is to permit larger claimants to offset the tax credit against other government levies, such as the EI premium. The objective is to have our larger companies, with significant resources, make better use of the program, and thereby help drive greater innovation in Canada.
Our second proposal is to boost innovation to combat the counterfeiting and piracy of intellectual property. Your colleagues on the public safety committee and the industry committee made several excellent recommendations earlier this year to protect holders of IP rights. I am pleased that the government has replied favourably to these two committees. We believe an important contribution to this work could be made if you were to recommend that adequate resources be made available to those departments and agencies that are on the front lines of the fight against IP piracy.
Mr. Chairman, we thank you and your colleagues for your interest, and look forward to responding to any questions you might have.