Quebec offers $340-million in subsidies and tax credits to stimulate Internet

The Quebec government has adopted a series of aggressive measures - totaling $340 million - to ensure that its residents and businesses are not left behind in the global race to get online. Reflective of last year's budget which aimed financial incentives at Quebec's new media industry, last week's provincial budget split its focus between the underlying network infrastructure, as well as targeted subsidies designed to get families connected to the Internet and businesses involved in e-commerce. Over the next three years, the government will spend $209 million to encourage small and medium-sized businesses to embrace e-commerce. A further $9 million will go to support activities related to e-commerce, and $121.5 million to connect families to the Internet. The latter incentive is a first for Canada. Rather than target all low-income families, the Quebec government is focusing its new subsidy specifically at families. Under the program, which takes effect May 1, households that receive a family allowance cheque can receive subsidies for up to 75% of their Internet access cost, including computer rental costs. "The grant will be paid to families as a monthly rebate by the suppliers against the total cost of the package... The cost of the rebate given families will be refunded to suppliers by the government on a monthly basis," states a report entitled Québec On Line, released as part of the budget package. Quebec currently ranks behind Ontario, B.C. and Alberta for the percentage Internet users. While that number has increased from 34.9% to 52.3% over the last two years, it hasn't been enough to erase the so-called "digital divide" that exists between Quebec and English Canada. "Although the transition to the Internet seems to be well under way, Quebecers and Québec lag quite a way behind the rest of North America from the standpoints of computerization, Internet use and e-commerce," the 82-page report notes. It estimates that Quebec is one to two years of network growth behind Canada's three other largest provinces. To combat the problem, the government is extending the eligibility of its 125% accelerated depreciation to include fibre optic cable and coaxial cable - good news for telecom and cable companies in the province. The incentive is expected to cost $9 million over three years. Getting businesses online, and doing business on the Internet was identified as another priority. The report notes that most Quebec businesses - particularly small and medium businesses (SMBs) - have not made the necessary investments required to conduct e-commerce. "The delay in the connection of Quebecers to the Internet is one of the reasons that SMBs are reluctant to embark on e-commerce," the report notes. " The government hopes to change that attitude with the introduction of a new tax credit for small and medium businesses that covers up to 40% of the cost to develop a transactional web site. The government estimates that about 10,000 SMBs will benefit from the credit, which tops out at $40,000 per company. The tax credit is expected to cost Quebec taxpayers $126 million over three years. A further $15 million over three years will be spent to ensure online transactions between the government and the public are confidential.

Quebec offers $340-million in subsidies and tax credits to stimulate Internet

Broadcast | March 20, 2000

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