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The Budget and the Economy. NDP Caucus, February 2009. Canadian Federation of Independent Business. The current situation: What CFIB is saying. Canada needs political stability, volatility only serves to deepen economic uncertainty Canada needs economic stability Avoid deficits - PowerPoint PPT Presentation
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www.cfib.ca
The Budget and the Economy
NDP Caucus, February 2009
Canadian Federation of Independent Business
www.cfib.ca
The current situation: What CFIB is saying
Canada needs political stability, volatility only serves to deepen economic uncertainty
Canada needs economic stability Avoid deficits Prudent, strategic spending Avoid bailout packages Develop a long-term personal income tax
plan Focus economic policy on SMEs
www.cfib.ca
The current situation: What CFIB is doing
Continues to meet with MPs, MLAs in all parties
Appealed for political and economic stability in a letter to federal and provincial leaders
Surveyed our members on spending, tax and ‘stimulus’ principles
www.cfib.ca
Economic stimulus: What it means to SMEs Balanced budget No large-scale bailouts unless:
In the form of repayable loans Temporary only Linked with criteria and specific, long-term outcomes
Short and long-term ‘stimulus’ Focus on initiatives aimed at supporting all families
and businesses: tax relief
Longer-term ‘stimulus’ infrastructure investment
www.cfib.ca
Current economic environment: National business expectations
108.4
104.2 104.0
100.5101.8
97.7
90.5
94.4
90.9
86.9
90.5 89.3
80
85
90
95
100
105
110
115
120
1988
= 1
00
Previous low, 85.2(Aug.1990)
Record high,113.8 (March 2002)
6-week average, 90.3
Confidence reaches
lowest levels since 1990
www.cfib.ca
Nova Scotia Business Expectations: SME Overview
Significant decline in confidence began in 4th Quarter, 2007
Until that time, optimism in Nova Scotia led Atlantic region; top third in country
Beginning 2008, optimism in Nova Scotia lowest in Atlantic region; bottom third in Canada
www.cfib.ca
92.0
97.5
85
90
95
100
105
110
115
120
125
Sept. 2007 Dec. 2007 Mar. 2008 Jun. 2008 Sept. 2008 Oct. 6-Nov. 16
1988
=100
Nova Scotia
New Brunswick
Nova Scotia Business Expectations: SME Overview
www.cfib.ca
Government and Economy: What’s working Better Regulation Initiative*
Small Business Advocate for energy rate hearings
Buy local marketing efforts
Broadband initiative
Office of Employer Advisor – WCB
Exceptions: Tobacco regulations, Home heating rebate
www.cfib.ca
NDP and Economy
Appreciate support for balanced budget
Caucus support for SME sector
Focus on working families, like small business families
www.cfib.ca
CFIB’s Focus
TAXATION
www.cfib.ca
Does the Current Nova Scotia Tax System Promote Entrepreneurship?
Select three responses only
Yes3%
No72%
Don't Know25%
Source: CFIB, Focus on Atlantic Canada Survey, September 2008, N=305.
www.cfib.ca
69%
52%
40%
29%
26%
27%
22%
16%
15%
4%
0% 20% 40% 60% 80%
Reduce tax burden
Reduce the regulatory burden
Increase financing opportunities
Market Atlantic provinces within Canada
Promote Atlantic Gateway
Increase regional cooperation
Market Atlantic provinces internationally
Improve information, training and advice services
Improve access to new ideas and innovations
Other/ No Answer
How Government Can Encourage Entrepreneurship
Select three responses only
Tax is top issue
Source: CFIB, Focus on Atlantic Canada Survey, September 2008, N=314.
www.cfib.ca
SME Priorities: Nova Scotia
Source: CFIB, OMO Survey No.62, N=869
85%
62%
55%
49%
42%
39%
38%
22%
17%
8%
Total tax burden
Gov't regulation and paper burden
Shortage of qualified labour
Employment Insurance
Cost of local gov't
Gov't debt/deficit
Workers' compensation
Availability of financing
Provincial labour laws
Other
Tax is top issue
www.cfib.ca
Why tax is a top priorityNova Scotia has:
3rd lowest level of basic personal exemption in Canada 3rd lowest level of basic spousal exemption in Canada One of only 3 provinces that do not index personal income tax
brackets; but other 2 (PEI and MB) increase the exemption intermittently; not NS
One of only 3 provinces with an income surtax----------------------------- 3rd highest provincial fuel tax rate in Canada 3rd highest small business tax rate in Canada Highest corporate tax rate in Canada 2nd highest WCB premiums in Canada Second highest debt per capita in Canada
www.cfib.ca
Why tax is a top priority
Single earner of $40,000 pays $3,258 in provincial income tax
3rd highest in Canada
One-earner with $40,000 income with two children pays $2,681 in provincial income tax
Highest in Canada
Source: New Brunswick Department of Finance 2008
www.cfib.ca
Spending: Cross-country
comparison Province
Increase in Total Expenditures*(1997-2008)
Alberta 145%
Newfoundland & Labrador 103%
Nova Scotia 97%Manitoba 85%
British Columbia 84%
Saskatchewan 80%
Prince Edward Island 79%
Ontario 77%
Quebec 59%
New Brunswick 56%
www.cfib.ca
1998 2000 2002 2004 2006 2008
Year
0%
20%
40%
60%
80%
100%
120%
Incr
ease
Spending (110%)
Inflation (27%)
Population Growth (0.3%)
Nova Scotia Government Departmental Spending1998 - 2008
www.cfib.ca
85%
79%
79%
75%
58%
56%
53%
29%
Reduce small business tax rate
Reduce provincial fuel tax
Reduce personal income tax
Reduce payroll taxes
Reduce user fees
Reduce general corporate tax rate
Reduce HST
Increase small business threshold
Source: CFIB, Focus on Atlantic Canada Survey , September 2008, N=289.
SME tax priorities
www.cfib.ca
The way forward: Upcoming budget
Fiscal measures must encourage – not discourage – entrepreneurship
Plan must be outlined to reduce overall tax burden on Nova Scotia’s working families Implement practical, ongoing increases in the basic personal
exemption Increase basic spousal exemption up to basic personal
exemption End bracket creep immediately Reduce small business tax rate (i.e. 0.5% every year for next
four years) Offset the impact of minimum wage increase by reducing
small business tax rate or extending the minimum wage schedule
www.cfib.ca
Hold spending to inflation + population growth (overall expenditures cannot continue to
increase by 8 to 9 per cent)
Balance budget
Continued debt repayment, earmark savings in interest payments to tax relief
Continuation of Better Regulation; outline for
plan past 2010
The way forward: Upcoming budget
www.cfib.ca
Province What’s Working What Needs Work
NB
Commitment to reduce the total tax burden on businesses and families.
No commitment to measure, report and reduce the red tape burden.
NLSignificant tax reduction past two budgets
Large spending increases
NSOn-going commitment to measure, report and reduce red tape.
Minimal tax relief for businesses and families.
PECommitment to reduce small business tax rate to 1% by 2010.
Deficit budgets
Atlantic Comparison
www.cfib.ca
Other Issues
Pre-budget consultation process
Budget date (fixed budget date)
NS Tax Review
CFIB’s top three for 2009: Personal income tax
Regulatory reform
Shortage of qualified labour