VANCOUVER, BC--(Marketwired - October 14, 2016) - According to the Chartered Professional Accountants of British Columbia (CPABC), the provincial government should leverage B.C.'s positive economic outlook to address B.C.'s relatively low business productivity.
"Although B.C.'s average labour compensation per worker and education levels increased, they still lag behind the national average. Our relative low productivity compared to other jurisdictions like Alberta and Ontario could be due to an abundance of small businesses, which tend to be less productive. For the coming fiscal year, CPABC recommends that the government focus on encouraging business productivity by establishing input tax credits for businesses, developing B.C.'s skilled talent pool, fostering head office growth, and helping small businesses grow."
Investment in machinery and equipment, which is a key driver of business productivity, has been impacted by the return to the provincial sales tax system. B.C.'s CPAs have ranked establishing business input tax credits as a key priority for the provincial government in the most recent CPABC Business Outlook Survey. According to the Business Council of British Columbia, the cascading effect of the provincial sales tax being applied along the supply chain and in the final sales price created a differential of approximately 10 per cent from when the Harmonized Sales Tax was in place.
CPA members across the province also found attracting and retaining skilled talent to be a major challenge to business success. Employers are concerned about the experience gap caused by skilled workers retiring and new graduates lacking required competencies. In many sectors, B.C. isn't graduating enough educated workers to meet the labour market needs. For these reasons, the B.C. government should work closely with the federal government, post-secondary education institutions, and industry to develop a cross-sectoral policy that better equips post-secondary students with needed skills, and efficiently integrates graduates into the workforce.
"With a competitive tax regime and access to skilled labour, B.C. will not only improve productivity, but will also attract new head offices and support the growth of those already established. Head offices contribute to the growth of local small businesses and the creation of industry clusters. Currently, B.C. only accounts for 7.5 per cent of all head offices in Canada. We recommend that the government continue to support initiatives like HQ Vancouver, and consider expanding it to include other major B.C. urban centres," continued Rees.
Fostering industrial hubs will have a positive impact on B.C.'s small businesses, which make up 98 per cent of businesses in B.C. The government has long recognized the importance of small businesses to the economy and has introduced various measures to support them. Small businesses in B.C. have long enjoyed a low corporate tax rate, and while this minimizes the tax burden, it can discourage entrepreneurs and small business owners from pursuing growth. Encouraging small businesses to grow will contribute to a more prosperous economy. The B.C. government should review the corporate tax structure and examine best practices from other jurisdictions to determine measures that can encourage business growth without hurting small businesses.
Read CPABC's budget submission to the Select Standing Committee on Finance and Government Services for the fiscal year 2017-18 at www.bccpa.ca.
About CPA British Columbia
The Chartered Professional Accountants of British Columbia (CPABC) was formed through the amalgamation of the Institute of Chartered Accountants of BC (ICABC), the Certified General Accountants Association of BC (CGA-BC), and the Certified Management Accountants Society of BC (CMABC). CPABC was officially established when the CPA Act came into effect on June 24, 2015. CPABC represents over 34,000 members and 5,200 CPA students and candidates.
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