Small businesses say ‘No’ to tax hikes & ‘Yes’ to significant spending restraint

CFIB pre-budget survey reveals 72% support reduced spending; only 7% support tax hikes

Regina, December 1, 2016 –Today, the Canadian Federation of Independent Business (CFIB) released its 2017 pre-budget survey results that show a strong majority of Saskatchewan entrepreneurs believe the province’s fiscal challenges should be tackled by implementing significant spending restraint, not tax hikes. The survey results also show 81 per cent of small business owners believe Saskatchewan’s advantage as a business-friendly province still exists.

This week, CFIB presented its pre-budget submission, “Keep Saskatchewan Business-Friendly” to Finance Minister Doherty. “We told the Minister that given the number of challenges Saskatchewan business owners are facing, the worst thing the provincial government could do is hike taxes or introduce new taxes to fund the province’s revenue shortfall,” said Marilyn Braun-Pollon, Vice-President, Prairie & Agri-business. “We fear tax hikes would threaten Saskatchewan’s reputation as a business-friendly province. Instead, the government needs to continue focusing on the spending side of the ledger in order to get back to balance.”           

The 2016-17 Saskatchewan Mid-Year Financial Report, which was recently released projects a deficit of $806 million. The provincial government has implemented a hiring freeze, is committed to holding the line on labour costs across all sectors of the public service, but said it would also review the possibility of raising taxes.

When asked what options the Saskatchewan government should implement to balance the budget, 72 per cent of Saskatchewan small business owners support spending restraint (i.e. reducing the size of government through workforce attrition, freezing government wages, etc.). Fifty-six per cent support the province running a modest deficit in 2017-18 with a plan to balance its budget in 2018-19.  However, only 7 per cent support the province running a significant deficit in 2017-18 with a plan to balance its budget in 2019-20. Only 7 per cent of business owners believe the government should increase provincial taxes to collect additional revenue.

“The message from the small business community is loud and clear - there is absolutely no appetite for tax hikes,” said Braun-Pollon. “Entrepreneurs want the province to get back to balance through significant spending restraint (cutting, controlling, and deferring existing spending), rather than increasing taxes and jeopardizing our competitiveness.”

“We are encouraged the Minister of Finance is committed to bending the cost curve by implementing a hiring freeze and holding the line on labour costs,” concluded Braun-Pollon. “However, with public sector salary expenses costing the provincial government $6.3 billion a year, it is evident the province can no longer afford a number of outdated and gold-plated compensation packages.”

CFIB’s small business 2017 pre-budget recommendations:

• Getting back to balance:
  • Implement significant restraint measures, such as further reducing the size/cost of government through attrition, narrowing the wages/benefits disparity (20.4%) between public and private sector employees and eliminating the banking of sick days in the public sector and introduce affordable short-term disability plans for public sector workers to better align sick leave provisions with those in the private sector.
  • If necessary, run a modest deficit in 2017-18 with a plan to balance the budget in 2018-19 to avoid increasing taxes.
• Avoid tax hikes to stay competitive:
  • Do not increase taxes or introduce new taxes to address revenue shortfall.
  • Reject calls for province wide property tax levy to fund infrastructure.
  • Reject any proposal that would provide increased taxation powers to municipalities.
• Continue to reduce red tape:
  • Accelerate the timeline for the baseline count of all business related regulations so relief can be provided to Saskatchewan business owners sooner.
  • Mitigate the impact of annually indexed minimum wage by introducing a special training wage (similar to Nova Scotia) and a gratuity wage for workers who earn tips (similar to BC, Alberta and Ontario).

CFIB’s recommendations are based on feedback received from its pre-budget survey which was conducted as a controlled-access, web-based survey from October 27-November 21, 2016 and had 384 respondents.

To arrange an interview or for further information, please contact Marilyn Braun-Pollon at (306) 757-0000, 1 888 234-2232 or email [email protected]. You may follow CFIB Saskatchewan on Twitter @cfibsk.

As Canada's largest association of small- and medium-sized businesses, CFIB is Powered by EntrepreneursTM. Established in 1971, CFIB takes direction from more than 109,000 members (5,250 in Saskatchewan) in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.