1998-1999 BUDGET:
ACTION PLAN TO FOSTER THE DEVELOPMENT OF THE FINANCIAL SECTOR
"The financial sector is of vital importance to the Québec economy for two strategic reasons. First, it now employs 170 000 people. Second, it plays a decisive role in channeling savings to economic agents, individuals, businesses and governments."
— Bernard Landry
(Québec City, March 31, 1998)—In the 1998-1999 Budget Speech, Deputy Prime Minister and Minister of State for the Economy and Finance Bernard Landry has announced an action plan to foster the development of the financial sector, which is important to the economy and job creation. The action plan consists of three main components.
DEVELOPMENT OF THE MUTUAL FUND AND PORTFOLIO MANAGEMENT INDUSTRY
"For some time, we have been implementing concrete measures to ensure that our managers, whose reputations are well established, are able to manage a larger portion of Quebecers’ savings, as well as savings from outside Québec, bearing in mind the free movement of capital and the free choice of investors and consumers," Mr. Landry emphasized. "Several incentive and research initiatives involving the milieus concerned have been carried out. The action plan that I am tabling tod ay contains new measures in this regard."
Financial assistance for the establishment of new mutual funds
To encourage the start-up and distribution of new mutual funds, the government is granting financial assistance to companies that create, prior to March 31, 2000, new mutual funds that are administered and managed in Québec. The companies can take advantage of a refundable tax credit, equivalent to 50% of the research, marketing, promotion and distribution costs of a new fund, up to a maximum of $125 000 per fund per year, during the first two years. Furthermore, income from the funds will be exe mpt from income tax for five years.
The government will support portfolio management companies while young managers in their employ are undergoing training. Such companies can benefit from a refundable tax credit equivalent to 40% of the wages paid to young managers, up to a maximum of $25 000 per year per eligible employee.
THE DEVELOPMENT OF MONTRÉAL, AN INTERNATIONAL FINANCE CENTRE
"The financial sector is of particular importance to Montréal’s economy. In order to attract new international financial operations, I am announcing today a major overhaul of the international financial centre (IFC) program," the Finance Minister noted.
New eligible operations
First, the range of eligible operations has been broadened considerably to include back office operations pertaining to international financial transactions, and the promotion, administration and management of certain mutual funds. These operations will now be eligible for the tax benefits accorded IFCs, along with certain cash management and financial engineering operations, financial leasing, factoring, letters of credit for import-export operations, and clearing house and fiduciary services.
Main advantages guaranteed at least until 2008
"To facilitate the promotion of this tax feature and clarify the program’s objectives, we will regroup under a separate statute the provisions now dispersed in the Taxation Act. In addition, we will guarantee until 2008 the main advantages granted to companies operating an IFC," the Deputy Prime Minister stated.
CFI Montréal will be mandated to draw up a new promotion, reception and canvassing strategy to attract new IFCs to Montréal.
Tax benefits accorded IFCs to be enhanced
The tax benefits accorded to IFCs will be enhanced:
— a refundable tax credit, equivalent to 40% of their wages will be granted in
respect of young employees specializing in international financial transactions, while
they undergo training;
— the tax exemption granted to foreign specialists working in Montréal has been
extended from two to four years;
— a tax credit of up to $75 000 a year will be granted to cover a portion of
canvassing expenses incurred to bring new operations to Montréal.
A number of administrative measures will be adopted with a view to simplifying and facilitating the management of the program.
ESTABLISHMENT OF AN INTERNATIONAL MATHEMATICAL FINANCE AND FINANCIAL INTERMEDIATION TRAINING AND RESEARCH INSTITUTE
The government has decided to set up an international mathematical finance and financial intermediation training and research institute that will offer advanced training to professionals and managers now on the labour market and conduct targeted research on priority needs. UQAM will assume the mandate in collaboration with other universities and organizations with recognized expertise in the field.
"Montréal has everything it takes to become a centre of excellence in North America in the realms of training and research in modern finance. Our financial sector can only benefit from such a situation," Mr. Landry remarked.
UPDATING AND STREAMLINING OF THE REGULATORY FRAMEWORK
The Deputy Prime Minister also alluded to the tabling in the National Assembly last fall of three bills aimed at updating and streamlining the regulatory framework governing savings and credit unions, securities trading, and the distribution of financial products and services.
"The legislation is intended to modernize the regulation of the financial sector, and simultaneously protect consumers and ensure the solvency of financial institutions, so that the sector can function efficiently and dynamically," the Deputy Prime Minister concluded.
SOURCE: ANDRÉE CORRIVEAU
COMMUNICATIONS ADVISOR
OFFICE OF THE DEPUTY PRIME MINISTER
TELEPHONE: (418) 643-5270