www.cfib.ca Budget 2008 Empowering Entrepreneurs Canadian Federation of Independent Business January 2008
www.cfib.ca
Budget 2008Empowering Entrepreneurs
Canadian Federation of Independent Business
January 2008
www.cfib.ca
About CFIB
Result of a tax protest 36 years ago
106,000 members nationally; 1,100 in PEI
Policy stance decided by members; one-member, one-vote
100% member funded
www.cfib.ca
The Power of Entrepreneurs: About more than business
Economic Contributions:
• SMEs employ 2/3 of working Islanders
• SMEs create 60% of new jobs in PEI
• SMEs responsible for 45% of PEI’s GDPSource: Statistics Canada• SMEs contribute time and money to amateur sports, arts and culture, youth activities
• Many roles: volunteers, trainers, parents, activities, leaders Sources: CFIB Building Better Communities Survey, 2005
Social Contributions:
www.cfib.ca
The Power of Entrepreneurs:
Who Canadians respect7.4
7.0
6.4
6.1
5.2
5.2
5.0
4.5
4.5
Farmers
Small businesses
Educ. system/Schools
Healthcare system
Legal system/Courts
Banks
Large companies
Government
Unions
Source: CFIB Small Business, Big Value, 2007
www.cfib.ca
The Power of Entrepreneurs: Who Atlantic Canadians trust to create jobs
59
25
14
4
0 20 40 60 80 100
SMEs
Government
Multi-nationals
Don't know
Source: Leger Marketing, Confidence in Canadians on Job Creation and Social Responsibilities, May 2005 N=1,502
www.cfib.ca
Empowering Entrepreneurs: Budget 07/08What SMEs liked from 07/08 budget Increase in basic personal exemption & personal income
tax brackets Decrease in the small business corporate tax rate
Concerns from 07/08 budget Deficit Increase in spending No commitment to reducing red tape Freeze in residential property tax assessments until 2010
www.cfib.ca
Empowering Entrepreneurs: What SMEs are looking for in 08/09
Balanced budget Spending restraint Balanced budget legislation
Tax reductions Personal income taxes (BPE, Indexation) Small Business corporate rate
Red tape Measurement Commitment to reduce
www.cfib.ca
Empowering Entrepreneurs:Fiscal responsibility 73% say that balancing the budget is
important to their business
79% support balanced budget legislation
Measures to balance the budget: Reduce the size of government- 85%
Reduce program spending- 22%
Reduce capital spending- 13%
www.cfib.ca
Government spending increased by 64% in last 10 years
Inflation increased by 27% over that same time
Empowering Entrepreneurs: Spending restraint?
1997 1999 2001 2003 2005 2007Year
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Spending (64%)
Inflation (27%)
Population Growth (2%)
www.cfib.ca
Empowering Entrepreneurs:Fiscal responsibilityMember Comments:
“Stop government waste”
“Improve efficiency”
“Reduce government loans to large corporations and companies that are high risk”
“Stop direct competition with private sector”
www.cfib.ca
Empowering Entrepreneurs:Tax reduction priorities Reduce personal income taxes
Increase basic personal exemption
Index BPE & PIT brackets with inflation
Reduce small business corporate tax rates & increase threshold
Reduce fees for permits and licenses
Reduce fuel taxes Diesel fuel
www.cfib.ca
Basic Personal Exemption by Province, 2007
Source: Federal and Provincial Government websites
$14,523
$9,600
$9,330
$8,676
$8,553
$8,404
$8,239
$7,634
$7,560
$7,484
$7,481
$0$2,000
$4,000$6,000
$8,000$10,000
$12,000$14,000
$16,000
Alberta
FEDERAL
Quebec
BC
Ontario
Saskatchewan
New Brunswick
Manitoba
PEI
Nfld/Lab
Nova Scotia
www.cfib.ca
Empowering Entrepreneurs:Business Tax Load
NB NS NL PEI0
20
40
60
80
100
120
Provincial Average = 100%
49%
61% 63%
104%
Comparison of Provincial Business Tax Load(Atlantic Canada, Indexed to National Provincial Average at 100%)
Source: Saskatchewan Business Tax Review Committee, Nov. 2005
www.cfib.ca
Empowering Entrepreneurs:How tax savings would be spent
Invest in new equipment
Increase employee wages
Pay down debt
Source: CFIB Mandate 227 Survey on Tax Competitiveness
6861 57
0
10
20
30
40
50
60
70
Per
cen
t
Invest in newequipment
Increase wages Pay down debt
www.cfib.ca
Empowering Entrepreneurs:Harmonizing sales taxes 52% say harmonizing sales taxes is important;
38% not important & 10% don’t know
80% say full input credits are important 11% not important & 10% don’t know
66% say PST is the most harmful provincial regulation
75% say sales taxes are affecting their growth
www.cfib.ca
Empowering Entrepreneurs: Reducing Red Tape
Cost of complying with regulations in PEI totals $102.3 million each year
Compliance costs are highest for the smallest businesses Regulations cost a typical Island firm (fewer
than 4 employees) $5,360 annually
www.cfib.ca
Empowering Entrepreneurs: Reducing Red Tape
73% are calling on government to publicly report regulatory burden on businesses
70% support setting targets for red tape reductions
59% support legislation that would restrict the introduction of new rules & regulations
www.cfib.ca
Empowering Entrepreneurs:Reducing Red Tape Keys to successful reform:
Measurement
Public Reporting
Targets for reductions
Improve communication & customer service
www.cfib.ca
Empowering Entrepreneurs:Reducing Red Tape PST is the most harmful regulation for
Island Businesses
Difficulties with PST system 2 systems (GST & PST) vs. 1 system (HST)
Clarity of regulations
Burden of regulations
Administration costs
www.cfib.ca
Crib- PST
Mattress-
Exempt
Blanket- ExemptSheet
s- Exem
pt
Lotion-
PST
Powder-
Exempt
Oil- Exempt
Cloth diape
rs- Exem
pt
Disposable
diapers- PST
Wipes-
PST
Wash cloths-
PSTChange Pad- PST
Bumper Pad- PST
PST Complexity
www.cfib.ca
1. Fiscal responsibility / spending controls Introduce balanced budget legislation
Adopt a debt-reduction strategy
2. Multi-year tax plan: Introduce indexation of BPE and PIT brackets
Reduce small business rate; increase threshold
Reduce provincial portion of fuel tax
3. Introduce taxpayer protection legislation
Empowering Entrepreneurs: Budget Recommendations
www.cfib.ca
4. Greater accountability on user fee increases
5. Commit to measure and reduce regulatory burden
6. Introduce legislation that would restrict the introduction of new rules and regulation
7. Improve budget day process Lock- up for stakeholders
Access to budget documents and finance officials
Empowering Entrepreneurs: Budget Recommendations