Good morning, and thanks so much for including the Fredericton Chamber of Commerce in this process.
I would like to welcome all of you here. I know that probably many of you have visited Fredericton before and that Mr. MacKinnon lived here many years ago. Thanks for visiting our community. I hope you enjoy your stay.
Our chamber of commerce has 950 members. We're the largest chamber of commerce in New Brunswick and are second only to Halifax in the Atlantic provinces. We are very representative of our business community. Our mission statement is “community prosperity through business”. I wanted to give you a bit of background about who we are.
I want to address question two, which is about federal actions that would help Canada's businesses. I draw your attention to the Canadian Chamber of Commerce's “Top 10 Barriers to Competitiveness” report, which they released earlier this year. That helped me form our response to this.
First of all, there are the corporate tax rates. Companies are penalized when incomes reach $500,000; they jump from the 11% small business rate to the 15% corporate rate. In the provincial tax rates, the jump is from 15% to 27%. It's a very large jump at that threshold. This is one area that we are concerned about.
Second, a huge and time-consuming hindrance for business is the cost and complexity of complying with Canadian tax law. It's a necessary hindrance, I guess, but it is a hindrance to business. For small and medium-sized enterprises, dealing with the CRA can be a complicated process. Between the GST, the HST, payroll tax, income tax, and CPP, many businesses are required to make 30 or more remittances each year. There are provincial ones as well, but many are federal. Businesses tell us that if they make a small error in their remittances, in fact, they're faced with unforgiving penalties of the same proportion as those for large businesses and with an appeal process that is complicated and costly.
Third, on the certain tax breaks that only help SMEs, the federal SR and ED program, scientific research and experimental development, offers a 35% credit for the first $3 million in expenditures for small firms, but only a 15% credit for expenditures exceeding $3 million. In a time when we're trying to push and enhance innovation, research, and growth in that area, we think this could be adjusted to reflect that.
As Mr. Gaunce has mentioned, Canada's tax system treats the transfer of family-owned businesses in farming and fishing favourably, but that is not always so in other sectors, where family members face the capital gains tax. This can discourage the transfer of family-owned businesses to the next generation, whereby they can remain profitable and continue to provide employment, as well as paying taxes, of course. We feel that should be looked at in terms of the inheritance taxes and capital gains taxes relating to the transfer of businesses.
The fifth item I want to mention is the small business deduction. The taxable capital threshold has remained at $10 million, which we feel disadvantages our larger members as well. Also, we did make a submission to the committee requesting that New Brunswick's Small Business Investor Tax Credit Act be added to the list of acts under which a corporation may be registered to qualify as a prescribed venture capital corporation. We need more private investment here in New Brunswick. Likely that's true across the country, but here in New Brunswick we are finding that specifically. We want to encourage private money in the economy. I did bring a copy of our submission that was done on August 5, 2016, if you would like to have that for your records as well.
The other question I want to address is question three in regard to “[w]hat...measures would ensure that urban, rural and remote communities enable residents to make their desired contribution to the country's economic growth and”—more specifically for us—“businesses to expand, prosper and serve...?”
Our response is that trade-enabling regulations and legislation, agreements, and infrastructure are what we need. We are a trade-dependent country, and this province most specifically is trade dependent. Increasing our exports should be a top economic development priority. We feel that the federal government plays a very important role in this regard, of course, in investing in appropriate trade-enabling infrastructure, both digital and physical. Natural resource development, we feel, is being hindered by Canada's inability to get products to market.
Another of the Canadian Chamber of Commerce's top 10 barriers to competitiveness isn't just a rural issue: roads and bridges, pipelines, railways, airports, and seaports. Having the right infrastructure in the right place at the right time can make all the difference in a global economy. We need the government to allow business to compete. One of the best ways to do that is to support projects that help us do that.
Specifically, I would like to share an example with you that's been a thorn in our side for several years. We are very strongly supportive of an expansion of the Fredericton International Airport. Our airport is one of 26 airports that form the national airport system.
These airports have been identified as being strategically important to the country's air travel system; however, NAS airports are excluded from ACAP funding. It was specifically established to assist airports with fewer than 525,000 passengers annually, so they were considered to be not self-sustaining.
Fredericton is one of six NAS airports that are small enough to otherwise need and receive ACAP funding, but because of this policy they're ineligible. Our airport is operating at 75% over capacity right now, and I'm sure you may have experienced that when you arrived here yesterday. You will most certainly experience it when you leave here, because the lineups to get through our security and even the holding areas for the gates are absolutely unacceptable. If you have baggage to drop off, you might want to consider pre-boarding tickets before you go to the airport. It's a considerable challenge being 75% over capacity.
Our airport was designed for 200,000 passengers and we're now serving 350,000. By 2030 we know that the numbers will be up to about 500,000. We understand that the only factor that's holding the expansion back is the exclusion from this funding.
Representatives at all three levels of government support the project, and the airport itself already has its one-third of funding in place. It has been frustrating that there has been so much talk of infrastructure renewal at the federal level, but we haven't been able to find a solution to this problem.
This is exactly the type of infrastructure project that the government should be focused on. It will have a long-term positive impact on economic development, and it will pay back the government's contribution through increased taxes in just six years.
That is all I have to say at this time, but I would welcome questions if there are any.