Thank you, Mr. Chair.
My name is Paul Stothart. My day job is vice-president of economic affairs with the Mining Association of Canada.
The Mining Association has also submitted a paper to this committee. The mining industry accounts for about 19% of Canada's goods exports. I would encourage you to read our submission. It seeks support in a couple of areas relating to mineral exploration and modernization of production facilities.
I'm speaking this afternoon on behalf of the Business Tax Reform Coalition. This coalition of 12 large trade associations represents manufacturers with cumulative exports of over $200 billion and employment of over 1.5 million in such areas as chemicals, mining and metals, steel, forest products, and petroleum products.
Our members help to create significant wealth for Canadians, which in turn generates revenues for governments. The coalition's members face strong international competition, and we therefore have a simple purpose: to advocate for the most competitive Canadian business tax regime possible.
Our submission to the committee is also fairly simple and straightforward. We have two main requests of the finance committee.
The first is to stay the course in moving the federal corporate income tax rate to 15% by 2012. The reduction in corporate tax rates introduced by the previous Liberal government, and continued by the present Conservative government, recognizes the importance of building a competitive tax regime. We commend the federal government for its progress in moving along this path. It's important that the government stay the course in this area.
Our second request of the finance committee relates to an area known as accelerated capital cost allowance, or ACCA. The federal government introduced accelerated writeoff for investment in new machinery and equipment in budget 2007, although only with a two-year projected time horizon. In budget 2009, this measure was extended for a further two years, although again with a limited time horizon.
This measure has the potential to be useful. In theory, the ability to write off an investment more quickly than would otherwise be the case should encourage greater investment in machinery and equipment. ACCA treatment can significantly improve cashflow at the front end of a project. However, this measure has fallen short of its potential for one main reason.
Simply put, companies generally require more than two years to complete a major capital investment project. While purchases of small-ticket items such as computers and pumps can be made and implemented quickly, this is not the case with large-scale capital investments. It can often require a five-year window for companies to complete a major modernization project.
Because the ACCA is only available once machinery has been ordered and put in place, the current time horizon of two years is too limited to be of use. This reality is the main reason the industry committee in its report and recommendations a couple of years ago concluded that a five-year window should be associated with this measure. There is a need for government to align this measure with the realities of actual business practices and timelines, that being a timeframe of about five years.
Let me conclude by quickly summarizing our two main requests: first, stay the course on corporate income tax cuts; and second, extend the accelerated capital cost allowance window to five years.
Thank you very much. I look forward to our discussion.