BACKGROUNDER
Summary of major initiatives to stimulate business development
in Newfoundland and Labrador

• Corporate income taxes have been reduced significantly for general businesses, manufacturing enterprises and for small businesses over the past decade. Newfoundland and Labrador has among the lowest corporate income taxes in Canada today. The manufacturing tax in Newfoundland and Labrador is the lowest in Canada.
  
• The tax free threshold for the health and post-secondary (payroll) tax has been increased to $500,000 from $100,000 over the past several years. This has removed 95 per cent of all businesses from the payroll tax rolls, and has put an estimated $8.6 million back into the hands of the business community each year. Government is committed to easing the payroll tax burden on business further, as the province�s fiscal situation permits, with the goal of eliminating it completely.
  
• The recently enhanced EDGE program makes new EDGE designated companies eligible to receive a new 50 per cent rebate on federal corporate income tax. This is in addition to a 100 per cent rebate on provincial corporate income tax, and a 100 per cent payroll tax rebate. The tax "holiday" for eligible companies is 10 years on the Northeast Avalon and 15 years outside the Northeast Avalon.
  
• A Venture Capital Tax Credit Program has been introduced for local businesses, providing a 20 per cent tax credit for those who invest in eligible businesses located on the Northeast Avalon and a 35 per cent tax credit for those who invest in eligible businesses located outside the Northeast Avalon.
  
• A new $2 million Small Business Seed Capital Equity Program has been introduced.
  
• A new $500,000 Small Business Market and Development Program has been introduced.
  
• A fully refundable provincial research and development tax credit of 15 per cent has been put in place to stimulate private sector spending on research and development in the province.
  
• The replacement of the provincial Retail Sales Tax and the federal Goods and Services Tax (at a combined rate of 19.84 per cent) with the Harmonized Sales Tax (at 15 per cent) has been a major benefit to all businesses in the province, both in terms of stimulating consumer spending and the introduction of full input sales tax credits for businesses.
  
• A micro-business loan program has been introduced, in partnership with the Federation of Co-operatives, for very small (micro) businesses and self-employed entrepreneurs.
  
• A $10 million small business investment program was established in cooperation with the federal government that is focused specifically on the needs of rural communities affected by the collapse of the groundfish industry.
  
• Reforms are being made to the workers� compensation system to make it more effective, competitive and affordable for both workers and employers throughout the province.

Media contact: Josephine Cheeseman, Communications, (709) 729-4570.

2002 03 21                               3:20 p.m.