Morgan Stanley sets up in Montreal
From the G&M:
The Quebec government has lured New York finance powerhouse Morgan Stanley to Montreal with a generous package of tax credits. Morgan Stanley says it will invest $200-million to build a technology centre in the city and create 500 jobs. Quebec Premier Jean Charest said a key element in winning over Morgan Stanley – which looked at several other locations around the world before settling on Montreal – was a new program in the latest provincial budget that provides for tax credits of up to $20,000 per employee for companies that create new jobs in the technology sector.
From the CBC:
Jerome-Forget said the province will give the company up to $60 million in tax credits over the next six years.
Morgan Stanley said it plans to hire mathematicians and computer science engineers. It’s now looking for a location. The investment bank has other technology centres in Budapest, Glasgow, India and Shanghai.
$60 million in tax credits. For 500 jobs. Average salary of $60k. It looks like Charest is looking foward to Year 6. The average provincial income tax on $60k would be around $8k (check here). There would be a multiple on that from indirect and induced economic activity of maybe $6-7k. The company might pay a few hundred grand in property taxes on their facilities.
It is difficult to determine corporate taxes that Morgan Stanley might pay because corporate taxes are levied using some formula based on sales in the province not on a ‘technology centre’. It is unlikely they will pay corporate income tax in Quebec. So my question is simple. What is the tax credit against? I can’t see how it could be against corporate income tax if they don’t pay much if any in Quebec?
Anyway, I haven’t had the time to study the Quebec program on this but I am curious.
Secondly, can they get Mathematicians and engineers in Montreal for an average (meaning some over and some under) of $60,000/year? Maybe.
This looks like a loss leader for Montreal. If there is payback to the government – it will be well after the five year period (based on what I can see).