Thanks, Mr. Chair and members of the committee.
My name is Loretta Wallace. I'm representing the NACCB, the national association of computer consultants of Canada. The association was formed in 1999 to work with legislators to ensure they understand how the IT professional service industry works and operates. Today it comprises 75 companies representing over $2.5 billion in annual revenues, 22,000 contractors, and 2,000 employees.
The NACCB wishes to intervene in the present review of the legislation on policy governing personal service corporations, as we believe this body of regulation has a powerfully negative impact on the Canadian labour market and, if expanded, would be incredibly destructive to the market for high-value contract services.
As you know, Canada is known for its resources; however, one of the most important resources is the knowledge and talents of its people. Within the Canadian labour market, the staffing and contracting sector is a critical function that enables market optimization and allocation of scarce resources.
Over the past 40 years, the Canadian market has evolved. As a result, we agree with the report of the standing committee that the review needs to take place and an upgrading of the Canadian tax legislation needs to happen to reflect the realities of that market and the model that is currently functioning, and functioning well, to the benefit of the government, Canadian corporations, and professionals who provide those services.
However, with the renewed focus on the issue of personal services to businesses and the emerging CRA strategy, which is aggressively targeting the information technology sector with audits and reassessments, the need to make changes to the legislation has become an issue which, we submit, requires attention and change. If the PSC audit and assessment exercise results in increased costs as agencies and clients alike make provision for the additional burden of employee benefits, and if individuals leave the contract sector, thereby reducing the labour and supply of these scarce resources, then the combined impact of reduced availability and increased costs may induce corporations to consider sending some jobs offshore.
This would have a significant and detrimental impact on the Canadian economy, especially in light of the fact that Canada has a talent crisis happening. As you know, our population is aging and, as with most other western countries, this creates a number of challenges for our continued prosperity.
Among the challenges is the future of highly skilled talent. Both the government and the corporate sector are dealing with this. Over the next 10 to 15 years, we will have fewer people entering the market than retiring. In fact, a recent survey of the ICTC, the IT sector council, projects that upwards of 170,000 job openings in the IT sector will emerge in the next five years, so we believe that we simply cannot afford to have any one element of the supply chain fall off. It is therefore vital that the CRA ensure tax fairness to this group so as to ensure that they continue to be available to help ensure both corporate and government competitiveness in the future.
We would agree with the conclusion of the committee report that the federal government examine the Income Tax Act with a view to proposing legislative amendments in such a manner that reflects the reality of the modern labour market. Specifically, we would recommend that no consideration be given to similarities of the engagement in employee-like relationships and the financial reporting programs similar yet apart from corporate and personal income reporting slips.
The committee also reiterates the fundamental belief that all Canadians have the right to arrange their affairs within the constraints of the law and that there be a recognition that every Canadian has the right to participate in the benefits made available to small businesses, without regard to the number of employees, the success or the length of their engagement, and the nature of the product or service being offered through the small business corporation.
My time is up.