A budget that focuses on key sectors and talent to boost Greater Montréal’s economy

Montréal International (MI) welcomes the 2016-2017 budget. Not only does the new budget provide financing for Montréal International’s project to retain international students, it also includes a number of favourable measures to make the city a more attractive destination, including a new temporary tax credit for digital transformation projects and a new electricity discount rate for businesses in the manufacturing sector.

In terms of sector approach, the Québec government also announced three new budgetary envelopes for digital, aerospace and life sciences strategies. These three strategies should be unveiled in the coming year.

Another highlight was the adoption of a plan for success in education and higher education, which should help bolster the pool of skilled workers needed by innovative businesses to stay competitive.

The only shadow in the picture: the budgetary envelopes for the ESSOR and Créativité Québec programs have been slightly reduced.

Budget highlights impacting Montréal International’s mission

Support for Montréal International’s project to retain international students

  • Funding of $1.6 million over three years: $700,000 in 2016-2017, $500,000 in 2017-2018 and $400,000 in 2018-2019
  • Funding will come from the Ministère de l’Immigration, de la Diversité et de l’Inclusion.

A $162-million budgetary envelope over five years for the upcoming digital strategy
This envelope will be used to finance the first digital strategy initiatives, to enhance the tax credit for the integration of IT in Québec SMBs and to set up a temporary refundable tax credit for major digital transformation projects.

New temporary refundable tax credit of 24% on salaries for major digital transformation projects

  • The tax credit only applies the first two years, for a minimum seven-year contract. The limit is $20,000 per employee, which amounts to an eligible salary of $83,333. After the first two years, those jobs may be eligible for the TCEBD.
  • The projects should create 500 jobs for a contract signed between March 18, 2016 and January 1, 2019.
  • The targeted sectors are mainly in computer system design and software publishing.

Budgetary envelope of $34 million over five years for various life sciences projects, for a new strategy in 2016

A $70-million increase for the upcoming aerospace strategy, raising the envelope to $250 million over the next five years
The new policy should:

  • support growth in the industry
  • diversify the industry
  • foster growth while bolstering SMBs
  • focus on innovation as a key driver for growth

A new electricity discount rate to encourage investment among manufacturing businesses

  • Maximum discount of 20% over four years, reimbursing equivalent to 40% in investments for converting production chains or improving productivity or energy efficiency by upgrading operating procedures.
  • Investment projects should amount to at least 40% of the business’ annual electricity costs or $40 million, submitted between September 30, 2016 and December 31, 2018, and completed by December 31, 2020.

Budgetary envelopes for ESSOR and Créativité Québec programs reduced

2016-2017 credits 2015-2016 credits
ESSOR $86.1M $92.0M
Créativité Québec $12.8M $17.8M

 

By Francis Langlois

Senior Analyst, Economic Research

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