The new provincial budget proposed by Quebec’s finance minister Ms Monique Jerome-Forget is very good news for any startup or high-tech companies in Québec. One of its main highlight is the new tax credit for the development of e-business (or “Crédit d’Impôt pour le développement des Affaires Électroniques”), which is much more interesting than was avalaible previously. High-tech companies will get a refundable tax credit of 30% of employee salaries, if they have more than 6 employees. The refund is capped at $20.000 for each employee.
Previously, tax credit programs for tech companies/startups were restricted to a few industries and special neigborhoods, like the Cité du Multimédia or the E-Commerce place. In contrast, this new tax credit program will be avalaible throughout the province and practically to any startup, although criterias of admission will be defined by Investissement Québec each year.
In practice, this means you can attract talent throughout the world to Montréal or Quebec, offer competitive salaries, and still get competitive costs. You can for example offer a salary of $67.000 yearly to a developer, and the governement will then pay back $20.000 to support this job.
Another new measure was bumping tax credit for research & development to $3 million, limited to $2 million previously.
Finally, it also introduced a new program entitled “Communautés rurales branchés à Internet”, aimed at connecting areas of Québec still not connected to high-speed internet, which is roughly 10% of the territory. The Quebec government will spend $20m yearly to equip municipalities with Wifi, as they found out that fiber optics is a costly technology.
IMHO, this is great, especially the first measure which will give a competitive edge to startups and hopefully foster local new technology companies. Of course, it’s just a drop in the ocean ($25.47 billion to be spent in healthcare, $13.98 billion for education …), and I wished they setup a program to make technology more attractive in higher education.
Comments
Peterb March 14, 2008
If angels or VCs want to give a business their money that is great. They are big boys/girls and can analyze the risk. But when you force everyone else to finance you through government, it is wrong.
Shame on you.
Heri March 14, 2008
I am sure that if you consider what high tech companies are giving to the government in terms of taxes and also to the country in terms of jobs and value creation, it’s well beyong the small subsidies thay they get.
Technology drives up innovation and productivity and are also key into moving a country forward. While I value what a truck driver or a secretary gives to the country, high technology companies strive to bring new technology, new software, new tools, and new improved processes that ultimately will benefit everyone.
Quebec is one of the most taxed province/state in North America, and this will help companies become competitive. A few years ago, I would have agreed too (i.e. let’s have less intervention, less taxes, less subsidies) but look what they have done with the subsidies for the video games industry. Now, Montreal is known all over the world for its video games companies and its AAA titles. I don’t know the exact number, but i would say it employs more than 6.000+ people. That would have never happen without the subsidies given to new video games companies since 2001.
Montreal Tech Watch March 14, 2008
New fiscal measures to boost local high-tech companies http://tinyurl.com/ywds9s
Peterb March 14, 2008
With the video game industry, do you really believe Ubisoft or EA will stick around when the subsidies stop? The home grown companies (A2M, etc.) will stay, but they were here *before* the subsidies. Besides, is that what you want for Quebec: government subsidized cheap labor for foreign companies?
Government cannot pick winners, they are naturally biased. For each positive example, there are 10 negative ones. They should not be in the investment business, but provide an even playing field for everyone. Today they choose a field you like, so you support the hand out. But next week it is something you don’t like (bombardier … again?).
Quebec is a fine place to start a high tech business (except for the income taxes). Are you saying all these wonderful companies you write about have financial problems so serious they need handouts? Their ideas are so weak they can’t attract private money or talent.
We need strong, tough, fighting companies that can survive on the world stage. Not babies sucking on the public tit. Let the weak die, that is normal in business … don’t prop them up with hand outs.
peterb.
Heri March 15, 2008
but i have a question for you, what would you do if you were running Quebec? to have “strong, tough, fighting companies that can survive on the world sage”?
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