An association of IT professionals has proposed an ICT strategy for Canada that would see technology professionals exempted from personal income taxes and the elimination of sales taxes on technology products. CIPS proposed the strategy in a press release issued Thursday afternoon.
“At CIPS we believe in order to ensure the long-term viability of Canada’s information technology industry, we need a concerted effort from government, academia and the industry,” CIPS said in the press release.
“In order to stimulate the sector and address the lack of qualified IT professionals, CIPS advocates recruiting more professionals from overseas, and repatriating Canadians who have left.”
Potential measures outlined by CIPS are:
* The elimination of income tax for Canadian IT professionals as an incentive to encourage students to enter the field and expatriate IT professionals to return to Canada.
* Eliminate the tax on “all technology sold in Canada” as a boost to manufacturers and retailers.
* A “relief mechanism, either financial or otherwise,” to encourage enrolment in ICT programs.
* A government Web site to promote an increased number of bursaries and scholarships from associations and companies.
About 3.5 per cent of Canada’s working population – 592,600 people – were employed in the ICT sector in 2007, according to Statistics Canada. ICT workers earned an average of $58,618 in 2007, 46 per cent more than the economy-wide average of $40,083.
The average ICT worker would pay $10,045 in federal taxes, according to Canada Revenue Agency’s 2009 schedule. That’s nearly $6 billion in federal tax dollars.
“I’m trying to provoke a dialogue,” said CIPS chair Greg Lane in a telephone interview.
Eliminating income taxes for certain professions isn’t unprecedented, Lane said, and it has been used strategically by other countries, including Ireland. “It’s not unheard of,” Lane said. “Is it unusual? Absolutely.”
But unusual strategies are necessary for an industry that’s in crisis, and technology in Canada is “definitely in crisis.” Lane said he sees symptoms of an unhealthy industry. Top of mind at the moment is the “feeding frenzy” of bidders for limbs of collapsed telecom company Nortel Networks Corp.
“That should never have happened,” he said, but with “the writing on the wall” about declining support for R&D, Nortel moved from being a research-oriented company to a profit-based company.
“That was the beginning of the end,” Lane said.
He also points to the 89,000-job gap in ICT over the next three to five years forecast by the Information and Communications Technology Council as a symptom of an industry in trouble.
“Government clearly can’t hire people in the public sector,” he said, but can stimulate interest in the sector.
Kevin Brennan, vice-president of professional development with the International Institute of Business Analysis, disagreed with the tax exemption position.
“I don’t think it’s going to be a helpful contribution to the discussion” about the ailing economy and IT industry, Brennan said.
“It’s not the kind of proposal that this or any other government would act on,” Brennan said.
Floating the tax exempt status for the profession makes it the focus of the economic discussion, Brenna said, rather than more realistic options like scholarship programs and tax breaks for those returning to school for IT-related subjects after losing jobs in other sectors.
He said it’s also important to encourage companies to invest in their IT infrastructure.
February’s federal budget contained a provision that allowed companies to write off 100 per cent of their hardware and systems software purchases in the next two years, a $700-million tax package to spur IT spending.
CIPS is seeking comment on what should be included in an overall Canadian IT strategy at this link.