CFIB advocates for small business in pre-budget submission
CFIB's pre-budget submission, a report that outlines the results of our member surveys and advocates for specific policies on behalf of our members, was unveiled today at a pre-budget roundtable with parliamentary secretary to the minister of finance Ted Menzies.
The pre-budget submission outlines the results of a fall/winter 2009 poll of our membership on how the Federal government should structure its budget in light of the current economic conditions, and what specific measures small businesses want to see announced.
CFIB's requests include an Employment Insurance (EI) Training Tax Credit – an innovative, cost-effective measure which would reward business owners with an ‘EI holiday’ in return for the hiring and training of new employees. In addition, CFIB is calling for a government offset of EI premium increases until the full $57 billion EI account surplus is repaid, as well as a comprehensive government strategy to reduce regulations and paper burden at the Federal level. These suggestions, along with a number of tax and policy suggestions, can be read about in detail in the full pre-budget document, which can be downloaded from the link provided to the right.
Here is a summary of CFIB’s pre-budget requests:
SMEs’ Key Budget Issues for 2010
- Minimize Employment Insurance (EI) rate increases come 2011: EI rates are expected to skyrocket and are a tax like any other. As payroll taxes have the biggest impact on business growth, CFIB is calling on the federal government to offset the expected maximum EI premium rate increase in 2011 through an injection of general revenues to the EI fund. Not only is there a moral obligation given the $57 billion surplus accumulated over the last 15 years, but this will do more to encourage employment among SMEs than almost any other measure.
- Take comprehensive action on reducing paper burden and regulations: Government must look at the total burden imposed by regulations and not get bogged down in individual regulations. Most importantly, however, is that it must become permanent and institutionalized within the Public Service. This requires political leadership, ongoing measurement and public reporting, and placing some constraints on regulators.
- Present detailed plan to eliminate deficit in the medium-term (5 to 6 years): It is essential that a detailed plan that outlines financial assumptions and specific cuts be presented so that Canadians know what to expect. Lowering government administrative costs, such as freezing public sector wages until the deficit is eliminated, and reducing and/or reallocating stimulus funds that have not yet been spent, are just two ways government can start controlling its costs.
- Keep to current tax plans: CFIB members recognize the difficult financial situation facing government in 2010. CFIB suggests a balanced approach that keeps the government focused on maintaining a competitive tax policy in key tax areas by avoiding tax increases, and continuing the implementation of previously announced tax measures, such as the corporate tax rate reductions and various accelerated CCA measures. Government should also consider some targeted, low-cost tax changes that could prove fruitful for Canadian society as a whole and SMEs in particular.
CFIB’s Top 5 Budget Requests
- Introduce an EI Training Tax Credit: The OECD recognizes that supporting informal, on-the-job training is the most effective way to stimulate job growth. Building on the New Hires program that existed in the 1990s, an EI Training Tax credit would provide an EI holiday for those businesses that hire and train new workers. It is an administratively simple measure that could be implemented by taking training funds from other “ineffective” EI training programs to finance it.
- Extend the Home Renovation Tax Credit for an additional year: This measure has proven to be very popular with Canadians and CFIB members are no exception. With almost half of CFIB members finding this measure beneficial (and more than 60 per cent of construction members), CFIB encourages the federal government to consider extending the Home Renovation Tax Credit beyond February 1st, 2010.
- Provide GST/HST vendor compensation: The federal government expects that all businesses act as unpaid tax collectors. GST/HST vendor compensation is the easiest and most direct way to recognize this fact and help reduce the sting of the transition to harmonized sales taxes.
- Create and implement a robust GST/HST Fairness Code: Solid work between CFIB and the BC government led to the introduction of a Taxpayer Fairness and Service Code. While other governments have codes, the BC code offers important benefits such as the ability to request an interpretation in writing, and having those interpretations supported even if they turn out to be wrong. CRA should adopt the BC Code which will be lost in the transition to an HST.
- Index the $750,000 lifetime capital gains exemption (LCGE) to inflation: CFIB was very pleased with government’s move to increase the LCGE from $500,000 to $750,000 in Budget 2007. This was a long time coming as the LCGE had been at $500,000 for more than 20 years. However, indexing the LCGE to inflation will eliminate the need for huge periodic increases. This will also fulfill an election promise made by the governing party during the last election.
Other Measures
- Implement and enforce Credit and Debit Card Code of Conduct.
- Tackle the erosion of the value of the small business corporate tax rate and develop a plan to decrease the rate over time.
- Address issues of pension inequity and find ways to ensure that all Canadians can afford a decent retirement.
- Ease succession planning by allowing the deferral of taxes on capital gains when transferring the business to the owner’s children.
- Expand the Apprenticeship Tax Credit to include non-Red Seal trades.
- Consider targeted measures such as:
a. Increase capital cost allowances on agricultural equipment.
b. Adjust GST/HST New Housing Rebate to inflation.
c. Implement a simplified automobile expense deduction as promised in 2008.
d. Allow the deferral of taxes for property reinvestment of small investors.
e. Recognize the unique nature of self-employed software consultants for tax purposes.
