Government Role in Economic Development
There are a number of things that investors look for from a government before investing in a particular region. Some of this information can be subjective such as the likelihood of a suitable work force, while some is more specific such as the existence of tax incentives for research and development. The following will examine four main areas of interest to investors: regulations and taxes, local demographics, existing infrastructure information, and direct governmental incentives.
Regulations and Taxes
Licenses, permits, regulations and taxes are obvious considerations when investing in a particular area. Questions include "Are there any potential tax benefits to this location?" or "Might there by unexpected expenses?". Provinces have departments aimed at bringing investments into their region, and may introduce “Several initiatives to reduce red tape and streamline regulations” such as in Saskatchewan. Governmental entities are where to look for regulation and tax information.
Demographic information of interest to investors may center on the available work force and customer base, but can also include questions about local lifestyles. Some of the most prominent thing to look for in a new location is the companies' environment such as start-up population and business incentive towards start-ups. As such, it is important to conduct research on the benefits that are provided to new companies. The most important one would probably be tax benefits such as provincial taxes, percentage state tax for commercial leases, and others. In Saskatchewan, the Provincial tax is 6% which is applied in addition to the Federal tax (7%). Businesses that have a reported revenue of $1.5 million need to submit their income forms every year whereas businesses with an annual revenue of over $1.5 million are required to report every 3-4 months. Governments can provide assistance with demographic data and “facilitate customer and market research.” A few organizations that are helpful in this regard are Statistics Canada, the Canadian Intellectual Property Office, Industry Canada's SME Benchmarking Tool, and others.
Existing infrastructure information
Investors want to know about the mechanics of operating a business in a particular location, such as the availability of sufficient utilities infrastructure and the commutes of the employees by road or public transit. According to Innovation Saskatchewan, Saskatchewan is a great place to open a new business at the moment. Over the last 10 years over $130 million has been invested in the province. The population growth and the current demographics of the population also help a great deal with attracting investors. According to Statistics Canada, the province "has the third largest percentage of workers aged 15 to 24 in Canada." Moreover, it is predicted that over 200,000 people will reach employment rate in the next 15 years, which would mean that there will be a 20% bigger work force available in the next 15 years (as of April 1, there are 1,161,365 people living in Saskatchewan). A younger workforce could also mean bigger innovation and a better environment for start-ups as younger people are more in touch with technology and more tech savvy than the older generation.
In Canada, there are provincial and national governmental incentives offered for a variety of purposes in order to assist business investment. Investors look for these when determining where to go. Saskatchewan offers government grants for purchasing office equipment and recruiting staff. "The Canadian SR&ED tax program lets founders get back much as 35 percent of what they spend on R&D costs." Another thing that can be very attractive is the Canadian tax return policy which allows for companies to get money back depending on their declared expenses and their revenue. The agency responsible for tax returns in Saskatchewan is the Canada Revenue Agency (CRA). Many online tools are available to assist with finding and applying for these programs. The Funding Portal is a great way to look for relevant and less known funds for a new company.
In conclusion, governments can provide information to potential investors in a number of areas to assist in their decision-making. These areas include regulations and taxes, local demographic information, infrastructure, and governmental incentive programs.