CCI’s 2025 Québec Pre-Budget Recommendations

By Jean-François Harvey
CCI Director of Québec Affairs

Québec's economy continues to feel the lingering impacts of the pandemic, with stagnant GDP growth and low productivity constraining our potential for sustainable, long-term growth. To sustain the Quebec model for future generations, we need to explore ways to diversify our economy and create more wealth.

Québecers need measures to slow the decline of our economy that meet their ambitious entrepreneurial spirit. At the Council of Canadian Innovators, we believe that the most effective way to boost productivity and drive long-term prosperity is through innovation. The good news is that we already see a desire to support innovators on the part of our decision-makers in Québec. For example, the creation of Axelys and the implementation of the Stratégie gouvernementale des marchés publics demonstrates a desire to change our ways of doing things. We urge the government to build on this and go even further to transform Québec further into a global leader of innovation.

Key Recommendations:

Our 2025 pre-budget submission contains several key recommendations aimed at stimulating the Quebec economy by improving various policies to support innovation:

1. Maintaining the Competitiveness of Quebec Businesses by Refining Law 14 and Ensuring Access to Francization Services: In an increasingly competitive market, innovators in Québec need a predictable regulatory framework that minimizes obstacles and encourages risk-taking. Law 14, in its current form, imposes additional administrative burdens on businesses. CCI proposes six adjustments to the law to strike a better balance between protecting the French language and economic development.
   ‍

2. Implement Measures to Better Align Training Offerings with Labor Market Needs: Quebec's tech companies struggle to find the workforce necessary for continued growth. We ask the government to expand the tuition fee exemption to include international students enrolled in information technology and engineering programs at institutions within the Montreal Metropolitan area. We also recommend making cooperative education mandatory in these fields of study.
   ‍

3. Reviewing Tax Policies Related to Stock Options and Capital Gains: Québec’s Finance Minister, Eric Girard, has announced his intention to harmonize the capital gains inclusion rate with the federal government. We believe this mistake could stifle risk-taking and unfairly penalize innovators. Québec is also the only jurisdiction in Canada where gains on stock options are taxed at 75% (with certain exceptions). Removing these two barriers to innovation would allow Quebec to stand out among Canadian provinces and establish itself as the country's true innovation hub.
   ‍

4. Adapting the Eligibility Criteria for the Synergy Capital Tax Credit to the Reality of Québec's Tech Companies: This tax policy is an excellent way to encourage risk-taking and stimulate investment. However, the eligibility criteria are highly restrictive and poorly suited to the reality of tech companies.  CCI proposes three adjustments to make the credit more accessible to Québec tech companies.
   ‍

5. Implementing Measures to Further Stimulate R&D Investments by Quebec Businesses: R&D investments have declined in Québec for the past 20 years. We propose that the government reward companies that choose to keep their headquarters in Quebec and penalize those that relocate their activities or transfer their intellectual property abroad to ensure that the economic benefits linked to government support remain in Québec.
   ‍

6. Allowing Quebec Tech Companies to Issue Flow-Through Shares: Flow-through shares are used in certain sectors with no short-term revenue certainty and development cycles are very long. These characteristics are those of many tech companies, which is why they should be allowed to use this tool to diversify their access to capital.
   ‍

7. Making the Tax Credit for Electronic Business Development (CDAE) More Generous for Companies Headquartered in Quebec: We must ensure that innovation support measures are fair and do not favor large foreign multinationals. By increasing the non-refundable portion of the CDAE, we are doing the opposite, as it is currently easy for these multinationals to use various tax maneuvers to maximize benefits from Québec’s programs and credits. The government needs to adjust its approach.
   ‍

8. Promoting Local Content in Government Procurement: We propose enhancing Québec's Government Public Markets Strategy by incorporating more innovation and considerations into the government’s procurement processes.
   ‍

9. Encouraging the Commercialization of Intellectual Property and Its Retention by Quebec Companies: CCI calls on the government to transform the Deduction for Commercialization of Innovations (DICI) into a refundable tax credit for tech companies and to increase financial support related to IP within the MEI’s innovation program.
   ‍

CCI’s 2025 Québec Pre-Budget Submission can be viewed here.

Through this pre-budget submission, Québec's innovators are sending a message to their government: we are proud to do business in Québec and proud of the province's unique heritage. By working together, we can make Québec a global leader in innovation support and commercialization. Future generations need us to come up with bold ideas and creative solutions that will ensure our collective prosperity.

‍

To learn more about CCI’s work in Québec contact Jean-François Harvey, Director of Québec Affairs, at jfharvey@canadianinnovators.org.

‍

About the Council of Canadian Innovators

The Council of Canadian Innovators is a national member-based organization reshaping how governments across Canada think about innovation policy, and supporting homegrown scale-ups to drive prosperity. Established in 2015, CCI represents and works with over 150 of Canada’s fastest-growing technology companies. Our members are the CEOs, founders, and top senior executives behind some of Canada’s most successful ‘scale-up’ companies. All our members are job and wealth creators, investors, philanthropists, and experts in their fields of health tech, cleantech, fintech, cybersecurity, AI and digital transformation. Companies in our portfolio are market leaders in their verticals, commercialize their technologies in over 190 countries, and generate between $10M-$750M in annual recurring revenue. We advocate on their behalf for government strategies that increase their access to skilled talent, strategic capital, and new customers, as well as expanded freedom to operate for their global pursuits of scale.