The tax-friendly policies of British Columbia’s Liberal government have paid off for its high-tech companies, according to an annual report that shows the sector outpacing the provincial economy in terms of gross domestic product.
Published by Leading
Edge BC, a non-profit organization whose purpose is to attract investment in the province, the report says that on average, high tech sector GDP in B.C. expanded almost three times as fast as the province’s overall GDP from 1993 to 2003, apart from a slide that mirrored the IT industry’s overall slump in 2001 and 2002.
High tech employment in B.C., meanwhile, has grown 2.7 per cent to over 45,000 in 2003 (the year from which the data is drawn), or 2.8 per cent of the province’s work force. The average tech worker’s weekly earnings in 2003 were $1,060, significantly exceeding the overall B.C. average wage of $680, according to the report.
Robert Grace, Leading Edge BC’s vice-president of economics and research, credited the momentum to the provincial government, which has implemented a series of policies to lower personal and corporate taxes since 2001. Those changes have dispelled misconceptions that BC is a difficult jurisdiction in which to do business.
“It put us back into the game,” he said. “When I’m in San Fran telling people in the life sciences sector that they can recruit the talent they’re looking for, they can see that the tax system not an impediment.”
Premier Gordon Campbell’s Liberal government was re-elected earlier this month, but with a slightly smaller majority.
Grace said the province has also made changes to labour regulations that demonstrate it understands the long hours that often go into software developmpent, for example.
“They don’t work nine to five and take weekends off. If it means sleeping in the office and taking a month off afterward or whatever, that’s just how it gets done.”
The British Columbia Technology Industries Association (BC TIA) is counting on Leading Edge BC to brand the province’s sector globally, said Ken Gikunda, its director of marketing and communications. The association continues to focus on lobbying the government for a more competitive tax environment, including an extension to a scientific R&D program that’s set to expire. BC TIA is also urging more spaces for IT graduates in provincial universities.
“That’s one of the things we see as a limitation to growth,” Gikunda said. “In the next five-10 years with baby boomers retiring and new companies coming up, they want to know what’s in the pipeline in terms of that next generation of talent.”
The provincial government has been publishing a similar report since 1997, but the activity has been turned over to Leading Edge BC as a way of encouraging new companies to set up shop or to open branch offices there. The information is gathered through BC Stats, which gives the report considerable credibility among CEOs, Grace said.
“Even with all of its foibles, it’s fully defendable because everyone knows how it’s collected,” he said. “CEOs rely on it when they speak to international investors, and it’s good because everyone’s singing from the same song sheet.”
The largest category of B.C.’s IT commodity exports is computers and telecommunications, according to the report, followed by life sciences products. The U.S. is the most significant destination for high-tech commodity exports at 80.0 per cent, followed by the European Union at 8.0 per cent, and Pacific Rim countries at 6.4 per cent.
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