Many of Canada’s largest research and development have voiced their concerns over the federal government’s cuts to the SR&ED program. According to a report by Canadian Manufacturers and Exporters (CME), Canadian businesses will receive a $750-million / year reduction in their funding from SR&ED. This could make Canada less competitive in the global economy, which could motivate large multinationals to move their R&D activities to other countries.
For example, executives of Research In Motion Ltd. have found that the SR&ED changes will cost the company $50 million a year. Morgan Elliot, RIM’s director of government relations, pointed out that RIM spends $1.5 billion a year on research and development, and pays more than $1 billion in corporate taxes, which means that the $50 million is a good investment for the federal government.
The Liberal critic for Science and Technology, Ted Hsu, also voiced concerns that the cuts to the SR&ED program hurts industrial sectors such as aerospace, automotive, information and communications technology, and oil and gas. Although the federal government has planned to move savings from the SR&ED cuts into direct funding, Hsu opines that there is no evidence that suggests that direct funding works better than tax credits.
