Good morning. Thank you again for giving us the opportunity to present.
To give you an idea of how important international trade is to our association and our industry, I'll give you my schedule for the next two weeks. As part of my job, I'm to promote our industry here in Canada. After spending six days in Germany and flying back Friday, I'm here with you this week and then I fly out to India on Friday to spend 10 days with them. International trade is very important to our association.
As Tim said, 80% of what we make will land somewhere else, in some other country. The difficulty is that our industry and our members are SMEs. You have to understand that although an FTA is good, it's delicate and difficult for SMEs because of their lack of global footprint and resources.
We believe in three pillars. The first pillar is that to be successful on a global scale SMEs must have what we call customer intimacy. What is customer intimacy? It means removing the barriers that come with culture and trade. Anywhere the government can help SMEs to overcome those barriers is particularly important.
The second pillar, and it's a critical touchpoint, is product leadership. This comes down to innovation. Innovation is very important to us because we will never be the low-cost provider on labour. Therefore, innovation is key and, obviously, the products and services we provide have to be state of the art.
The third pillar is the one I'll spend most of my time on. Because, as I said before, we will never be the low-cost provider, competitiveness is critical. I'm bringing to your attention a letter that our partner APMA, with which we participate in providing information, has provided to Minister Morneau for the upcoming budget. I'll provide copies to anyone who doesn't have it, but in this letter there are three critical parts that we would like to see addressed.
The first objective is to restore Canada's advantage as a competitive position. The second is to protect competitiveness by creating an investment-friendly tax regime. The third is to ensure that Canada's competitiveness landscape is at least level with other jurisdictions. This is very important to SMEs. Because we are not in those other jurisdictions, we continue and are committed to producing here in Canada, but we can't do that if we can't compete.
I'll give you the highlights of the document and, again, I'll make it available afterwards. Tax reform is one. Without going into the details, obviously, we have to compete in our corporate tax rate. We will continue to employ Canadians and we will continue to generate profits in Canada, but if we're taxed at a higher rate, obviously that puts us at a disadvantage.
Personal income tax is another. Most people ask why personal income tax comes up in this discussion. Because we're in such a competitive market, because we're so close to the United States, and because we're on a global scale, we are trying to attract and retain skilled talent in Canada. However, personal income tax and personal income tax reform that doesn't promote this makes poaching very easy, especially by the United States and other countries that are willing to help our Canadian talent relocate.
The SR and ED—scientific research and experimental development—tax incentive is very important. As we said before, Canada will never, ever be a low-cost labour provider. Therefore, innovation when it comes to being more strategic, being more efficient and being able to make our products state of the art hinges greatly on scientific research and development. We believe this is a missed opportunity for Canada. We will continue to be the innovators and leaders, but we need the support of the government to be able to take the risks that come with being an innovator.
Accelerated depreciation is also very important. Because our industry is so heavily dependent on capital expenditures, the company I manage reinvests about 30% of annual revenue. Most companies reinvest between 10% and 30% of their annual sales in their business. Accelerated depreciation is huge. It actually has a twofold benefit. It helps us to be able to reinvest in our business, but it also generates activity within the economy.
The last area in which the government can provide a lot of support is grants. I will give you the example that I brought to your attention the last time I was here. Although it is intended to help SMEs, the restructuring and new design of the SIF program doesn't help SMEs because of the threshold and the difficulty and the contingencies and the categories they put on SIF. This is another example of missed opportunity with good intentions.
One simple one that I believe should also be on the docket is tax reform and consolidated tax reform. This will make doing taxes much easier and simpler for Canadian corporations.
I would like to leave you with the thought that, as Tim said, we export 80% of what we do. FTAs are very important to us, but competitiveness is equally important to us, so market access and being able to sustain jobs here in Canada are equally important.
Thank you.