Remove tax, financial barriers to training: report

By Laura Cassiani
|Canadian HR Reporter|Last Updated: 09/08/2003

Tax disincentives are keeping those most in need of training from receiving it and ultimately helping to widen the already deep skills gap in labour, a recent report of the Toronto Training Board (TTB) suggests.

According to the report,

Rebalancing the System: Seven Tactics to Reduce Tax Barriers and Enhance Training in Toronto

, employees in smaller businesses and in low-wage, blue-collar and clerical jobs have few if any training opportunities but have the greatest need for developing new skills for acquiring and maintaining employment. The board receives funding from Ottawa and the province of Ontario.

The report urges the federal, Ontario and Toronto governments to remove tax disincentives and reorganize training and labour policies to allow employers, especially small business owners, to offer training to employees. The report is under review by the federal Standing Committee on Finance.

Smaller business owners rarely have the financial or managerial means to support an ongoing training and development program. To encourage these employers to offer critical training, the TTB recommends that the federal government offer tax credits for costs relating to training.

Although small business owners can deduct employer-sponsored training costs as an expense, said Susan Brown, executive director of the TTB, the deduction isn’t enough to encourage owners to offer training opportunities.

The one recommendation that will have a direct impact primarily on small business owners is the TTB’s recommendation that the municipality of Toronto amend its fair wages schedules in order to require any contractor or supplier working with the city to support training.

Current policies for construction services and suppliers of goods for the city only support apprenticeship programs. These contractors, even where they employ only a handful of employees, would have to implement training programs.

Brown said the recommendation is not meant to “unduly burden” the small business owner. She said the recommendation is offset by the other recommendation calling for tax credits for training initiatives.

Training, she said, is in the interest of all involved and should be promoted and supported by government.

“It’s in the interest of both sides, of labour and management, that training happens and that good training happens. It’s in everybody’s interest to encourage training,” said Brown.

One of the government programs targeted by the report is Human Resources Development Canada’s (HRDC) much criticized skills development employment benefit.

The recommendation urges HRDC to expand its eligibility requirements for workers not in school who have been home raising children, those enrolled in English-as-a-second-language or literacy courses and those underemployed and not enrolled in any full-time training or education.

“Government policies either impose tax penalties on workers who are enhancing their skills to keep jobs or tighten eligibility for training programs,” said Brown.

The seven recommendations were passed by all members of the TTB, a non-profit, multi-stakeholder organization, including representatives from labour, management, training associations and educators. The TTB is one of 25 training boards in Ontario and is sponsored by the provincial Ministry of Training, Colleges and Universities and HRDC.

Toronto Training Board recommendations:

•The City of Toronto should amend its fair wage schedules to mandate its suppliers and contractors to support training opportunities for all workers.

•Ontario Student Assistance Plan (OSAP) policy-makers should review to what extent their policies to lower the number of defaults have affected the supply of training opportunities for people with low incomes.

•Human Resources Development Canada should expand its Skills Development Employment Benefit eligibility.

•The federal government should not tax Skills Development Employment Benefit tuition funds.

•The federal government should exempt Registered Retirement Savings Plan contributions made from severance or buyout funds when determining training program eligibility.

•The federal government should not tax workers for employer-sponsored, work-related skills enhancement.

•The federal government should give tax credits to small businesses for training costs.

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