Small business gives the budget a B
The 2012 federal budget had some positive news for small business with major progress on eight of CFIB's top 12 priorities for 2012. However, this budget did not go fast or far enough in dealing with spending, the federal deficit or public service compensation and pensions.
2012 Budget highlights:
Employment Insurance (EI): Small businesses will be pleased that the EI Hiring Credit was renewed for 2012. In addition, positive changes have been made to the EI rate setting process and future increases will be capped at 5 cents for employees and 7 cents for employers.
Spending: We are disappointed in the baby steps taken by the federal government to restrain its spending. While there has been a lot of talk about the amount of spending reductions in this budget, overall program spending continues to rise.
Pensions: The government has begun to tackle unsustainable federal public sector and MP pensions. We are particularly pleased that there is a commitment to have public sector employees contribute more to their pension plans and measures were taken to discourage early retirement.
Old Age Security (OAS): While supportive of the idea of raising OAS benefits for those who delay their retirement, many small firms will be concerned with the increase in the eligibility age for OAS to 67. Until all MPs and public sector workers start retiring at age 65 or older, there should be no increases in the eligibility age for Old Age Security for the rest of Canadians.
Innovation Programs: While more details are needed, many small and medium-sized firms will be alarmed with the changes to Scientific Research and Experimental Development (SR&ED) tax credits.