CATA seeks federal tax cuts to boost IT economy

The Canadian Advanced Technology Alliance (CATAAlliance) is lobbying the nation’s government for federal budget changes to help the flagging IT economy.

CATA executive director David Paterson addressed the House Standing Committee on Finance this week and recommended tax cuts, restructured R&D spending programs and more money for post-secondary education. The committee is holding pre-budget consultations in advance of the next federal budget expected for February 2002.

U.S. President George W. Bush proposed tax cuts on Thursday and Canada should follow his example, said CATA president John Reid. “You benchmark against the U.S.,” he said. “We need to not only be equal to, but maybe a little better than (the U.S.), because it goes down to attracting investment dollars.”

The corporate tax cuts that provincial leader Mike Harris has already set in motion for Ontario are “an excellent signal” that the federal government will take similar steps, he added.

To compete with the U.S., education should receive more government funding, he continued. More money for education is part of CATA’s ongoing platform. “Three years ago we issued something called ‘double the pipeline,'” said Reid. “It was basically a challenge to governments and industry to double up the resources in support of training knowledge-based skills.” Maths and sciences in post-secondary institutions and more job-specific training in IT learning centres all require support such as that provided by the Canada Millennium Scholarship Foundation, he said.

In order to fund tax cuts and more education spending, CATA is suggesting that the government take another look at industry programs that have failed to deliver results. Paterson said regional development programs are ripe for cuts. “If program spending worked, Cape Breton would be the industrial centre of Canada,” he said. “Literally billions of dollars have been poured into Cape Breton and it’s still the worst place in Canada to look for a job.”

These proposed cuts are particularly relevant in light of increased government spending on security and military concerns and bail-outs for airlines in the wake of the terrorist attacks of Sept. 11, added Paterson. The attacks may also result in the budget being delivered sooner than the anticipated February deadline, making CATA’s proposals all the more timely, noted Reid.

Existing investments in industry R&D programs could be better spent if they were reorganized under one roof, said Paterson. As it now stands, Scientific Research and Experimental Development (SRED), the Industrial Research Assistance Program (IRAP, an R&D program for small businesses) and Technology Partnerships Canada (TCP) are all controlled by different government agencies.

The government could get more mileage out of these programs if they were under one jurisdiction, provided it’s not the Canada Customs and Revenue Agency, said Paterson, which currently looks after SRED. “Their basic role in life is to collect taxes. It’s very hard to get the words ‘incentive’ and ‘audit’ into a single sentence and come out with a positive result,” he said.

CATA’s membership includes Nortel Networks, Cisco Systems Canada, IBM Canada, Alcatel and many of Canada’s other IT players.

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Jim Love, Chief Content Officer, IT World Canada

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