Provincial budget 2003-2004 gets passing grade thanks to export development strategy
Montreal, March 11, 2003 The budget proposals presented today by Pauline Marois, Quebec's Minister of Finance, the Economy and Research, which the government will be required to adopt in whole or in part the day following the impending election, elicited a lukewarm response from the Board of Trade of Metropolitan Montreal.
For the past few weeks, we've been hearing announcements promising hundreds of millions of dollars of investments or spending in many areas. Not surprisingly, today's budget sets the tone for the next electoral campaign with measures aimed chiefly at individuals. In so doing, the government has somewhat neglected the key creators of employment and wealth in Quebec: companies, especially those in Greater Montreal, asserted Benoit Labonté, the Board of Trade's permanent president.
Fortunately today's unveiling of the new Stratégie québécoise de développement des exportations was a notable exception to this trend and the reason Mrs. Marois gets a passing grade for her budget, continued Mr. Labonté. Indeed, the Board of Trade has been consistently encouraging the government for some time now to more actively support Quebec exporters. We are therefore pleased with its commitments in this regard.
Last December, on behalf of its 7,000 members, the Board of Trade presented its provincial pre-budget submission to Minister Marois in which the organization identified two key issues for Metropolitan Montreal and the Quebec economy: business competitiveness and the financing of large cities along with concrete measures that could be promptly applied and that would generate immediate results.
In the current context of heated international competition and trade globalization, companies must be highly competitive in order to assume their rightful place in the global arena. To this end, the Board of Trade proposed to Minister Marois last December:
- that the capital tax be immediately and completely eliminated since it is highly detrimental to business productivity;
- that the provincial government include new measures in its next budget to support exporters.
The new export development strategy is similar in many ways to the orientations espoused by the Board of Trade regarding the needs of Quebec exporters. The success of the export support services offered by our branch World Trade Centre Montréal confirms the relevance of supporting companies interested in expanding into foreign markets. We have noted the government's willingness to work together and, in this regard, the World Trade Centre Montréal is ready to work closely with the government to implement this new strategy, affirmed Benoit Labonté.
However, the Board of Trade believes the government's inaction on the matter of capital tax is cause for concern given that this tax discourages investment, hampers the competitiveness of our companies and in some respects, stifles job creation. Despite the government's previous decisions, Quebec is increasingly losing ground to the competition. It should be noted that Alberta and British Columbia have completely eliminated this tax while Ontario is actively working to do the same. Although the gradual decrease announced by Quebec last year is helping the situation, the gap that remains with Ontario remains worrisome, stated Mr. Labonté.
Although, as stated in the City Contract, the provincial government recognizes the key role played in Quebec by the Montreal region, whose core is in the new City of Montreal, the upper echelons of government have somewhat limited municipal investments in the past few years due to budget constraints. However, the needs and challenges facing the urban regions continue to grow and cannot be addressed for lack of sufficient, new and diversified revenue sources. In this regard, neither the current budget nor the city contract has found a total, permanent solution. In its pre-budget submission, the Board of Trade made the following short-term recommendations:
- the provincial government, together with the representatives of Quebec's largest cities, should conduct a comprehensive examination of how to diversify the revenue sources of municipalities and the resulting recommendations should translate into action in the 2004 budget;
- as of the next budget year, the provincial government should either exempt the municipalities from the QST or reimburse them in full in this regard;
- the compensation in lieu of taxes paid by the provincial government to the municipalities should equal 100% of the local taxes on the property value of all buildings owned by the government, as of the next budget year.
The measures we proposed to the Minister of Finance regarding city financing are easy to apply, do not require new programs, and above all, do not call for new taxes. They can have a quick impact, in fact, as quick as the cities need, remarked Benoit Labonté.
Given that the government has shown it is open to the possibility of committing to large-scale projects, such as city fair centres, that will enhance the economic development of the region, the Board of Trade cannot help but regret that the government has not committed to rapidly launching the superhospital construction projects recommended by Université de Montréal and McGill University, concluded the president of the Board of Trade.
The Board of Trade of Metropolitan Montreal has more than 7,000 members. Its mission is to be the leading group representing the interests of the Greater Montreal business community. Its objectives are to maintain, at all times, relevance to its membership, credibility towards the public and influence towards government and decision-makers.
Vice-president, Strategies and communications
Board of Trade of Metropolitan Montreal
Tel.: (514) 871-4000, ext. 4010