PEI has become the latest jurisdiction to offer a tax credit for investing in small businesses.
The Community Economic Development Business program (CEDB) offers Islanders a new method to invest in the economic development of their own communities, Sheridan said. Through the CEDB program, an eligible business obtains equity financing from fellow community members and the Province provides a 35 per cent personal income tax credit, the Community Development Equity Tax Credit, to the individual.
I have said before that I offer qualified support these types of programs but I think people need to understand the limits to their efficacy. The vast majority of small businesses are providing services in the local community or area in which they operate. They are plumbers, electricians, dentists, consultants, hair dressers, car repair shops, coffee shops, etc. Encouraging others to invest equity in these firms will likely strengthen many of them and have other positive effects but it won’t necessarily lead to new jobs and a broadening of the tax base. These come from growing the economic pie not from injecting new capital into the dentist sector.