Thank you, Mr. Chair and committee members, for your stop here in Calgary.
It's a pleasure to address the Standing Committee on Finance regarding budget 2018 and how the federal government can help Canadian businesses to be more productive and competitive.
Our recommendations focus on policy changes that will build on the recommendations of the finance minister's economic growth council, benefit Canadian businesses, and address Canada's budget deficit by broadening the tax base, all while costing little in terms of program spending. Through consultations with the Calgary business community, the chamber has identified four ways for the federal government to improve Canada's productivity and competitiveness.
The first is to offer a competitive tax jurisdiction. In the 2018 budget we can improve the competitiveness of Canada's tax system by reducing the overall burden of corporate taxes, reducing complexity, and addressing barriers that discourage business growth. The chamber believes that the way to raise revenue and encourage economic growth is to lower tax rates and expand small business eligibility, because lower corporate tax rates free up money that can instead be invested and support business growth, which will in turn broaden the available tax base through economic growth and corporate scaling.
In a recent Calgary chamber survey, 41% of Calgary businesses thought the number one thing that government could do to support their success was to reduce corporate income taxes and fees. Therefore, the Calgary chamber recommends that the federal government reduce the small business tax rate from 10.5% to 9% by 2019—in line with the Liberal Party of Canada's campaign platform—increase the small business income threshold from $500,000 to $1 million, reconsider the changes proposed to taxation of private companies, and, at a minimum, extend the consultation period to allow for proper discussion and full consideration of the effects of proposed tax changes.
The second is to improve workforce skills and participation. Despite Canada having a highly educated workforce, its productivity levels remain lacklustre. As Canada's population continues to age and workforce growth slows, the Government of Canada can increase productivity through budget 2018 by enabling increased participation of under-represented groups in the workforce. Raising the participation rates of Canadians without post-secondary education has the potential to add $38 billion of GDP. In addition, increasing the participation rates of indigenous peoples up to those of non-indigenous Canadians could add another $7 billion of GDP annually.
We also heard from members that there is a skills gap, a mismatch between the skills being obtained by our workforce and the skills needed by businesses, particularly for the digital economy. Therefore, the Calgary chamber recommends that the federal government introduce a broad tax credit for employers across Canada to offer training, post-secondary placements, and internships, and introduce tax incentives for training of under-represented groups in the workforce and workers who may not have the necessary skills to succeed in an increasingly digital world.
The third is to incent innovation. Canada lags behind our peer countries on innovation. Fifty-three per cent of technology companies report that finding and hiring experienced talent is their biggest obstacle to growth. The federal government could continue to work with the business community to address barriers that are limiting access to highly skilled global talent. Canada does not benefit as much as it should from the intellectual property created here. All federal government programs, such as SR and ED, have encouraged greater private sector expenditures in research and development, but Canadian businesses are still struggling to translate those expenditures into revenues. The Calgary chamber therefore recommends addressing the revenue side by reducing the corporate tax rate on any new revenues earned on innovative or new technologies developed in Canada, through what is commonly referred to as an intellectual property or R and D box tax program.
The final recommendation is to encourage capital investment for business growth. Canada has a company growth problem. Canada's 1.2 million small and mid-sized companies are critical to innovation and entrepreneurship and employ nearly 70% of the Canadian workforce, but only 1.4% of Canada's mid-sized companies go on to become big companies. In the 2018 federal budget, the Government of Canada can encourage business scaling by addressing the barriers limiting small and mid-sized businesses' access to capital. The Calgary chamber therefore recommends that the government establish a federal investor tax credit, similar to that in the provincial models, equal to 30% of investment against federal taxes to encourage greater capital investment in small and mid-sized companies. The program should be open to both small and medium-sized companies looking to expand production.
That is all for our comments. Thank you very much for your time and attention. I'm very happy to take any questions.
Thank you.