Co-op employers in B.C. should be able to get tax credits for hiring students, says the executive director of UVic’s co-op program, Norah McRae.
Ontario and Quebec have tax credit programs in place for co-op employers; but in B.C., a training tax credit is only available to employers hiring apprentices who take part in eligible apprenticeship programs in the trades.
“We’re suggesting that since a program is already in place — the training tax credit for apprentices — perhaps it would be possible to expand the eligibility to include co-op students,” says McRae.
McRae has been advocating this for about six years without success. She recently presented the idea at a UVSS board meeting in hopes of gaining student support.
McRae understands that implementing a tax credit for co-op employers would result in foregone tax revenue for the provincial government, but she believes it is an effective long-term investment.
Giving co-op employers a tax credit will increase the number of co-op students getting hired says McRae, and in turn the economy will benefit from students attaching to the labour market more effectively, reducing unemployment and keeping resources within the province.
“There’s a direct link between working in co-op and keeping a job [with the same employer] after graduation,” she says. “Also, it keeps that skilled, intelligent resource here in B.C.”
Eighty per cent of co-op terms in the province lead to employment after graduation with the same employer according to the Greater Victoria Chamber of Commerce website.
The Chamber recommends that the provincial government introduce a tax credit for B.C. business employers equal to 15 per cent of wages paid to co-op students for work placements.
McRae says the tax credit would especially help small and medium enterprises to hire co-op employees. Small and medium businesses are the majority of employers in B.C.
Also mentioned on the Chamber’s website: small businesses find the cost of establishing co-op opportunities prohibitive, B.C. business chambers have reported.
“Students work hard and add value to workplaces. It’s a good strategy for increasing productivity of those enterprises. It frees up business owners to do more things they are good at . . . likely leading to more job creation as those businesses become more successful,” says McRae.
McRae believes the provincial government’s lack of response on this issue is most likely due to the shaky economy. But when the economy was doing well in previous years, there was a sense that companies could manage financially and did not need the tax credit. “We haven’t been successful because of those two arguments,” says McRae.
When asked for comment on the idea of a co-op tax credit, the Ministry of Finance cited the B.C. Jobs Plan, the provincial government’s blueprint for economic development. Part of the plan, which was published in 2011, focuses on new investment in skills training — that is, in skills that are required specifically for a trades or technical career. This includes extending the training tax credit period for employers and “identifying possible enhancements” to the program.
The only support UVic has historically seen for co-op employers is a wage subsidy, which the provincial government cut in 2002. McRae says this subsidized about $350 per month per student employed with a non-profit or small business.
The Ministry of Finance declined to comment on why this co-op funding was cut. It also did not answer questions about whether any funding or tax credits for co-op employers might be instated in the future.
“[A wage subsidy] is another instrument that could be used instead of a tax credit. It’s the same sort of idea, which is that you decide there’s a target you want to help support in some way,” says McRae, adding that a wage subsidy would work better for non-profits, which, if registered as a Canadian charity, are exempt from certain taxes.
Twenty-three institutions across the province are currently offering co-op programs. At UVic, one in four students participates in the program (provided their field of study does not entail a practicum), and a work term is usually four months long.
