The Investment Industry Association of Canada (IIAC) says it is encouraged that the B.C. government has recognized the need to provide relief to businesses facing difficult conditions and ensure continued growth as the economic environment gradually improves.

IIAC says the B.C. budget, which was released yesterday, “provides a realistic assessment of the province’s economic prospects in the near term and is a judicious mix of fiscal and tax policies to maintain a growing economy and address environmental challenges.”

Economic activity in the province has been severely weakened by the slowdown in the North American economy, the collapse in the U.S. housing sector and a continued strong Canadian dollar, the IIAC says.

“The small and mid-sized business sector in the province accounts for one-quarter of all employment and a significant share of overall economic activity. It is the expansion of these local businesses that holds the future of the province, and will fill the ‘head office” gap’, says Ian Russell, president and CEO, IIAC.

The reduction in the general corporate tax rate to 10% from 12% in the next two years, and the small business rate cut to 2.5% from 4.5% in the same period are positive steps, the IIAC says.

It adds that “The proposed changes to the International Financial Activity Act will promote international business activity in the province through the International Financial Centre, and the elimination of the capital tax on financial institutions is a positive competitive move.”

IIAC says it would have liked further incentives for capital-raising for small and mid-sized business – with the B.C. government pushing Ottawa for lower capital gains tax relief, refundable R&D tax credits and tax-related flow-through financing vehicles.