Government giving away $6.9 million more tax rebates than expected

Teresa Wright
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Economic Development Minister Heath MacDonald

Aerospace, bioscience companies outperform to earn higher benefits

The P.E.I. government is giving away $6.9 million more in tax rebates to aerospace and bioscience companies than it expected to, thanks to better sales and profits than originally predicted.

The province offers corporate tax rebates to up-and-coming sectors, such as aerospace and bioscience, as part of efforts to grow the province’s economy. The tax rebates are tied to business success – so the more revenue they generate for the economy, the more rebates they receive.

Cabinet recently approved a special warrant of $6.9 million to address the increase in tax rebates for 10 companies in these two sectors.

FACT BOX: Who gets rebates

Economic Development Minister Heath MacDonald says increased provincial revenues will offset this special warrant, so it will not increase the province’s budget deficit.

“This is a sign of positive economic development in key sectors,” he said.

“As companies succeed and grow, they add employees who spend money in the community and they invest in expansions to their businesses, which contributes to the provincial economy.”

The bioscience industry in Prince Edward Island includes 40 companies that generate $125 million in sales annually. It employs more than 1,300 Islanders in highly skilled positions and is responsible for more than 1,700 direct and indirect jobs. Bioscience has tripled in size over the past 10 years. 

Aerospace companies generate $149 million to the provincial economy and employ more than 1,360 Islanders. Like bioscience, the sector has grown steadily particularly in international exports, which have increased by 300 per cent over the past five years.

Organizations: Islanders, MDS, Tube-Fab

Geographic location: Prince Edward Island

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Recent comments

  • Avery G
    March 27, 2016 - 18:35

    The public, and perhaps even this reporter, misunderstand this story. The government is not giving away $6.9M in money it was previously using to deliver services. This is FORGONE revenue, taxes that have never been realized. Technically, the govt collects the taxes, but hands them back. It is an incentive program, without which we probably would not have built the aerospace and biotech sectors to the point where they employ so many Islanders at very good wages. The fact that rebates are higher than expected should be seen as a success. Governments build sectors using these incentive programs and then, when the rebates get so high, the temptation is to raid the pot and start collecting, just like what happened to the film industry in NS. It would be foolish to consider this here, and instead we should be congratulating and encouraging those companies to further invest in our province and employ even more Islanders. I certainly hope those of you complaining about this are not farmers who benefit from a multitude of benefits, incentives, tax credits and protectionist policies. Or other coddled sectors, for that matter.

  • david
    March 27, 2016 - 16:40

    As usual the commenters on this site don't understand how business work because they can't get off their sofas to actually contribute to society on PEI. The more the company spends and grows the more the economy benefits. These companies could be doing this anywhere but chose PEI because of the benefits offered which are offered by every Provincial Government outside the main business areas of the country. Jamie Fox would not question this because he knows as former business owner how this works and the benefits it produces.

  • Laurent Beaulieu
    March 27, 2016 - 14:54

    In all the comments below not one refers to the wealth and jobs generated by such industries. This is high value for PEI, but since lack of information and understanding appears to be the basis for most comments, no one understands the benefits generated for PEI.

  • Robert Arsenault
    March 27, 2016 - 10:58

    I hope the opposition is going to question this, we are the ones that are going to pay for it with less prgrams and tax raising

  • Eastern Voter
    March 27, 2016 - 10:52

    Islanders voted for them; now suck it up!!

    March 27, 2016 - 09:27

    Let me try and understand this Government thinking. An individual who makes more money pays more taxes, but companies on PEI pay less taxes the more they make. Only a politician could come up with thinking like this.

  • rate payer
    March 27, 2016 - 08:04

    How long can a company keep on getting this rebate, - forever? Did he forget about the aerospace debacle, where the Province ended up with property I New York state, as part of the settlement. How much did PEI loose on that transaction and tax rebate? Considering the track record of the government, I doubt very much if the benefits are as rosy as McDonald would like us to believe it is. The formula of the rebate being based on generated revenue, seems strange, how can the government budget for this, or even know the 'claim' is legit, when it is based on somebody else's book keeping? - This is an other case open to abuse.

  • don
    March 27, 2016 - 07:36

    what is there profits??????? as a tax payer i think we have a right to know. wade said an open government.

    • EL Douglas
      March 27, 2016 - 10:08

      The only thing open about this government is its pocket book to business and friends!

    • don
      March 27, 2016 - 11:07

      wade will put tax payers so far in the hole by the time voters wake up 26 generations will still be paying. but the rich will never pay. and wade so much for your big promises you and ghiz must be twins.