IT sector ‘disappointed’ in Manley budget

Tuesday’s federal budget was a mixed blessing for Canada’s IT sector, according to experts, and the only real winners are those that use technology in health care.

There were some measures prepared by Finance Minister John Manley designed to improve the high-tech economy, but they fell short of expectations, said Canadian Advanced Technology Alliance president John Reid.

One example is the elimination of the federal capital tax over five years. Reid said he would rather see businesses be able to take advantage of that sooner rather than later, given that IT is often driven by short-term gains.

“”Overall, there really wasn’t a strong new vision of Canada, which of course, from a high-tech sector perspective, that is something that really relates to our constituency,”” said Reid.

“”It was very much like a 1980s budget, as opposed to a budget that is really getting us to the next level. There is, I think, significant disappointment. Someone has to pay the bills, which is your R&D performers. There were no changes whatsoever on the access to innovation dollars through the SR&ED (Scientific Research & Experimental Development) tax credit program.””

David Mason, a tax partner in Deloitte & Touche‘s Ottawa office, agreed that the government hasn’t really addressed critical tax credit issues in the budget. “”I think there are some technical tax issues that we were hoping would have been fixed,”” he said. “”The investment tax credits have been a great program to assist Canada’s knowledge-based industries, but right now I don’t think they’re having as much of a desired effect as they should have.””

A bright spot for Canada’s IT community, however, could be the $190 million in equity to expand venture capital by the Business Development Bank of Canada. “”That was clearly destined to knowledge-based industries, or at least a portion of it,”” Mason said.

The health-care sector will receive a windfall of $5.5 billion over five years to be invested in IT, diagnostic and medical equipment, health information technology, and the creation of a six-week compassionate family care leave benefit under employment insurance.

Of that $5.5 billion, $600 million will go towards the development of electronic patient records across Canada. “”That in itself will be a major development fund that actually doubles what was given to Canada Health Infoway as the original basis of their structuring,”” said Donna Strating, CIO of Edmonton’s Capital Health organization. “”Clearly we all knew that would not be adequate to launch the broad initiatives across Canada, so therefore more funding and support was needed to keep things moving very r

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Jim Love, Chief Content Officer, IT World Canada

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