|FOR THE PROSPERITY OF OUR ECONOMY
Mr. Speaker, prudent fiscal management, quality social programs and modern infrastructure will not sustain this Province unless our economy is vibrant, growing and forward looking. Government recognizes that small business is the primary engine of economic growth in the province. The small business sector accounts for over one third of all paid employment. This sector is creating new jobs at a rate faster than any other, accounting for about 95% of all new net job creation in the province. Measures I am announcing today will contribute to sustaining this record and to the continuing growth of this important sector of the economy.
Renewal Strategy for Jobs and Growth
Creating the conditions that will allow Newfoundlanders and Labradorians to capitalize on their economic opportunities is an integral part of this government's plan for the future. The recently completed Jobs and Growth consultations showed stakeholders were supportive of government's overall efforts and direction. Several measures we are announcing today respond to the consultations. As well, we are releasing an interim report on the major themes that emerged from the consultation process and the priorities for action that government intends to pursue immediately.
Seed Capital Equity Program
Concern was expressed throughout the consultations about the lack of access by small business to sources of capital. We are announcing a new Seed Capital Equity Program with funding of $2 million. This program will make up to $50,000 available, on a matching basis, to new entrepreneurs or existing small businesses seeking expansion opportunities in emerging areas of the economy offering significant growth potential.
Venture Capital Tax Credit Program
Government also intends to introduce a venture capital tax credit program. This program will provide investors with a tax incentive to invest in local businesses. Details will be announced this year following consultations with the business community and other stakeholders.
Business and Market Development Program
A new Business and Market Development Program is being established with an allocation of $500,000. The program will provide new entrepreneurs or expanding small businesses with access to funding, on a matching basis, to help them acquire the necessary business expertise to pursue new business ideas and markets for their products or services.
Mr. Speaker, having a competitive tax climate was emphasized throughout the Jobs and Growth consultations as an important element of government's plan to encourage economic growth. Government is prepared to make changes to the tax system to create a more positive business climate. In 1997, this government cut taxes by $105 million with the implementation of the HST and eliminated sales tax from the operating costs of businesses. Last November, government announced that personal income tax would be cut by $175 million over three years, commencing with a $42 million cut for the 2000 tax year. In both the 1998 and 1999 budgets, government cut the payroll tax by increasing the exempt threshold.
The Premier's Advisory Council on the Economy and Technology recommended in their report on the tax system that the corporate income tax rate for companies operating in the manufacturing and processing sector be increased from the current rate of 5% to 14%. Mr. Speaker, government has given careful consideration to this recommendation and has listened carefully to the business community during the Jobs and Growth consultations. We believe it is more important, at this time, to maintain the competitive advantage of businesses in this sector. Therefore, I am pleased to announce that there are no increases in corporate income tax rates in this Budget.
Payroll Tax Reduction
Mr. Speaker, I am very pleased to announce today that this year government is cutting the payroll tax for a third consecutive year. The payroll tax threshold has been increased from $100,000 to $150,000 over the past two budgets, reducing the payroll tax burden by $2.5 million annually. The threshold will be further increased this year from $150,000 to $400,000. In the last two years, the threshold was increased by $50,000. This year we have raised it by another $250,000.
This measure will remove approximately 1,300 small businesses from the tax roll and lower the tax burden for all others. Over the past three years, 1,825 small businesses have been completely removed from the tax roll.
The 1% tax rate for renewable resource industries will be equalized at the general rate of 2%. The net impact of the changes announced this year will reduce the payroll tax by a further $4.1 million annually. These measures are consistent with recommendations contained in the Advisory Council's report and the messages received during the Jobs and Growth consultations.
Payroll tax reductions since 1998 will put $6.6 million annually back into the hands of employers, including many small businesses. Government remains committed to further reductions in the payroll tax as fiscal conditions permit.
Mr. Speaker, a special emphasis has always been placed by this government on rural revitalization. This budget commits $40.3 million in new funding for small business and regional economic development under the $81 million three year post-Tags economic development program and other cost shared agreements.
The Collective Enterprise Development Program provides micro-loans ranging from $500 to $5,000, as well as counselling services, to very small businesses and self-employed entrepreneurs. The program will be expanded over the next two years through a new investment of almost $500,000.
A $10 million investment in 15 Community Business Development Corporations across the province will provide risk capital for small to medium sized businesses in communities affected by the collapse of the groundfish industry.
An initial investment of $500,000 also is being made to establish a network of Single Window Business Service Centres in each of the 20 economic zones to provide more accessible and streamlined services to the small business sector.
Fisheries and Aquaculture
Mr. Speaker, one of the success stories of our economy continues to be the emergence of the new fishery and the growing aquaculture sector.
Fisheries Diversification Program
The Fisheries Diversification Program is a major catalyst for the rejuvenation of the fishery. This has been accomplished through investments in developing new fisheries, new products and new markets. This year, $1.2 million is allocated to the program as part of the $10 million federal-provincial Economic Development Component of the post-Tags initiative.
Quality Assurance Initiatives
A major factor in the recent success of the fishery has been the emphasis on quality control. An additional $250,000 is being invested in quality assurance initiatives to permit increases in fish inspection quality, enforcement and awareness activities.
Improving existing infrastructure is essential to the diversification of our fishing industry. An additional $150,000 has been allocated for the maintenance and repair of community based fisheries infrastructure through the Special Assistance Grants Program and the Infrastructure Maintenance and Repair Program.
Mineral Exploration Program
To attract the investment necessary for mineral exploration and to support our growing junior mining sector, government announced last year a three year $6 million Mineral Exploration Program, to be matched by at least another $6 million from industry, for a total investment in mineral exploration of $12 million.
The program is now being extended for an additional two years. Funding for the program will also be increased by $250,000 a year. This will bring the Province's contribution to $11 million over five years, and with the matching funds from industry, will see at least $22 million invested in the mining sector, an increase of $10 million over last year.
Mr. Speaker, tourism continues to be a major success story for the provincial economy. With the success of the Cabot 500 celebration, the Canada Winter Games and Soiree 99, tourism is up over 30% since 1996.
To help ensure tourism meets our ambitious growth targets, government is providing an additional $500,000 for the Vikings! 1000 Years celebration. A travelling entertainment showcase will accompany a Viking longship as she makes her way around the Province this summer to 10 ports of call. This is in addition to $3.8 million already provided for planning, events and marketing for the Vikings! 1000 Years celebration.
Newfoundland & Labrador Arts Council
Funding for the Newfoundland & Labrador Arts Council will be increased in this budget by $250,000, or over 50%. The cultural sector creates 7,500 direct and indirect jobs and generates $200 million in revenue each year. Arts Council grants play a key role in initiating much of the activity in this sector. The increased funding will allow the Arts Council to give a greater number of grants to artists, as well as more substantial grants to individual recipients.
for the health of our people, for the health of our economy
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