It was the news that municipal leaders were hoping to hear and, when they did, it was greeted with cheers.
During the May 9 Federation of Northern Ontario Municipalities (FONOM) conference in Mattawa, Ontario Premier Ernie Eves announced that all of Northern Ontario would become a "tax incentive" zone. Under the plan, eligible businesses relocating to Northern Ontario and existing businesses with plans to expand would not be required to pay provincial business education tax, capital tax or employer health tax. The province is already planning on eradicating the capital tax with the first 10-per-cent cut on January 1, 2004.
The initiative takes effect starting January 1, 2004 and runs for 10 years.
"This initiative was the commitment that I made during my leadership campaign for the party, that I included in my first throne speech and in my speech to (the Association of Municipalities of Ontario) last August," Eves said. "It gives me great pride to announce this program to bring economic prosperity and growth to a part of the province close to my heart."
As part of the program, municipalities will also be asked to provide full municipal property tax relief for all eligible businesses. Eves said the province would be assisting municipalities in efforts to market their communities as tax incentive zones.
Municipalities that have identified a potential new investment will be required to submit a business case outlining the proposed business and an explanation of how the investment would benefit the local economy without hurting existing businesses.
Businesses would have to meet certain eligibility criteria, demonstrating that it will be economically beneficial to their community while not hurting existing businesses that are already established in the community. The minimum requirement is the hiring of at least five people with a minimum investment of $100,000.
"I am committed to tax incentive zones. They are an idea whose time has come," said Eves. "I'm making Northern Ontario a beach head for this initiative because I believe that communities throughout Northern Ontario should be a places where people can find economic success and remain throughout their lives to enjoy the advantages that the North has to offer."
Eves said the economy of Northern Ontario has been focused primarily on harvesting the natural resources that are in the North and then sending them elsewhere to be processed. The program that has been introduced is the government's way to create jobs in the North by encouraging value-added production of goods and services, particularly in the fields of silvicultural equipment, millworks, wood products, such as furniture and pre-fabricated homes, and new waste management and environmental projects.
"We're into trying to encourage businesses that wouldn't normally come here to come here," he said.
"This is an incentive for them to locate here and it gives them a tax break for the first 10 years."
The initiative was welcome news for municipal leaders who cheered the announcement. Among them was Sudbury Mayor Jim Gordon who earlier in the day called for the province to institute a Northern Ontario-wide tax incentive zone.
"It's a huge commitment from Premier Eves from the government of Ontario," said Gordon. "It is going to give all of us in the North an opportunity to go from hewers of wood, carriers of water and miners, and give us a chance to look at manufacturing in the north," he said.
"This is absolutely fabulous news for the communities of Northern Ontario," said Timmins Mayor Jamie Lim. "There has been a lot of anxiety through Northern Ontario in the last 18 months. If the province went forward with the six pilot projects as originally planned, it would have put a lot of regions and municipalities at a disadvantage.
"The announcement today that it is a pan-northern initiative couldn't get any better," she said, adding that the program means that communities will be better able to compete head-to-head with more prosperous ones in southern Ontario. "The challenge is up to us in the municipalities, our economic development officers, the councils and the mayors to take this economic development tool and make it work for us."
