P.E.I. says no to venture capitalist
ThePrince Edward Islandgovernment has decided not to offer tax credits to people buying into labour-sponsored investment funds, effectively closing the door on a Halifax-based venture capital company.
Growthworks Atlantic operates in every other Atlantic province and wanted to add Prince Edward Island, but the province said no to tax credits, leaving the fund without its biggest selling point for investors.
Every province except P.E.I. and Alberta offers tax credits to people buying into labour-sponsored investment funds.
The idea is people invest in the fund and the fund invests the money back in companies from the same province. The Island has offered tax credits for such funds before, but found investment money was leaving the province faster than it was coming back in.
"It's fair to say they had some very legitimate concerns about the past performance of the national funds that operated in Prince Edward Island," Tom Hayes,chief executive officerof Growthworks Atlantic, told CBC News.
"We are committed to making investments in the provinces where we raise the money and we've gotten off to a fairly active start."
Growthworks is part of a national group, but Hayes said 14 of the fund's 15 directors and all its managers live in Atlantic Canada.
Hayes said he offered to put aside an amount equivalent to the tax credits granted in a trust account and only draw those funds down when an investment in the province is made, but that wasn't enough to sway the government.
No one from the government was available to talk to CBC about Growthworks. In an e-mail, a representative of P.E.I. Business Development Inc. said it is continuing to evaluate the progress of the Growthworks Atlantic fund.
The deadline for changing the tax forms to offer the tax credit this year was July 31, so there will be no tax credits until at least 2007.