Tuesday, February 29th, 2000
Kristin Goff and Bert Hill
The Ottawa Citizen
Brigitte Bouvier, the Ottawa Citizen / CATA Alliance president John Reid
says yesterday's federal budget made the right moves but the benefits won't be
felt soon enough. Other high-tech executives criticized the modest tax relief
the budget offers.
· Tax changes in the federal budget could double to $1.6 billion the investments that flows to tiny, starving start-up companies. Denzil Doyle, chairman of Capital Alliance Ventures, a commentator and an investor in small technology companies, celebrated the move to let investors defer taxes on as much as $500,000 in capital gains if the money is promptly rolled into new small companies.
· But the Information Technology Association of Canada said Paul Martin's latest budget signals an important change in the government's relationship to the technology industry. "For the first time, finance officials and the minister have begun to understand the new economy," said Gaylen Duncan, president of ITAC.
· However, Kevin Vachon, chief executive officer of Nuvo Network Management, said the cuts to corporate, personal and capital gains taxes are not enough to make a difference. "We are still among the heaviest taxed of G-7 countries and our companies are still fighting for markets around the world without a level playing field."
· Ian McLaren, chief executive of CrossKeys Systems Corp., said the budget doesn't do enough to give corporations and individuals enough after-tax resources to build for the future. "They are moving in the right direction but they still have not redressed the balance on taxation (of personal, corporate, capital gains and stock options)."
FULL STORY :-
Tuesday, February 29th, 2000
Kristin Goff and Bert Hill
The Ottawa Citizen
Brigitte Bouvier, the Ottawa Citizen / CATA Alliance president John Reid
says yesterday's federal budget made the right moves but the benefits won't be
felt soon enough. Other high-tech executives criticized the modest tax relief
the budget offers.
Tax changes in the federal budget could double to $1.6 billion the investments that flows to tiny, starving start-up companies.
Denzil Doyle, chairman of Capital Alliance Ventures, a commentator and an investor in small technology companies, celebrated the move to let investors defer taxes on as much as $500,000 in capital gains if the money is promptly rolled into new small companies.
"I think you are going to see angel investors now rivaling the venture capital industry in terms of investment in a year," said Mr. Doyle who has criticized the lack of investment support for the riskiest small companies.
He estimated that individuals invested about $800 million in startup or young companies in Canada last year while the venture capital industry invested about $1.6 billion in more mature and stronger young companies.
Spokesmen for major high-tech lobbies took different tacks, criticizing the budget's content and praising the direction of change.
"They got the signals right, but they didn't move fast enough," said John Reid of the Canadian Advanced Technology Alliance (CATA).
"The trouble is, we don't have five years to catch up with the other countries; we needed decisive action now. Everyone knows that whoever moves into the White House next January will lower American taxes again, putting us further behind."
But the Information Technology Association of Canada said Paul Martin's latest budget signals an important change in the government's relationship to the technology industry.
"For the first time, finance officials and the minister have begun to understand the new economy," said Gaylen Duncan, president of ITAC. "There are a number of things which clearly will feed particularly the IT (information technology) sector, and small companies startups."
He noted that corporate tax rates for technology companies will fall, from the current 28-per-cent rate to 21 per cent over five years.
However, Kevin Vachon, chief executive officer of Nuvo Network Management, said the cuts to corporate, personal and capital gains taxes are not enough to make a difference.
"We are still among the heaviest taxed of G-7 countries and our companies are still fighting for markets around the world without a level playing field."
Ian McLaren, chief executive of CrossKeys Systems Corp., said the budget doesn't do enough to give corporations and individuals enough after-tax resources to build for the future.
"They are moving in the right direction but they still have not redressed the balance on taxation (of personal, corporate, capital gains and stock options)."
All technology industry spokesmen were happy with increased spending for university research and training.
However, Mr. Reid was concerned that most of the $1.5 billion in extra funding is tied to matching support from the private sector or provincial governments.