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The Budget and the Economy

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

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The Budget and the Economy

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  1. The Budget and the Economy NDP Caucus, February 2009 Canadian Federation of Independent Business

  2. 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

  3. 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

  4. 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

  5. Current economic environment: National business expectations Confidence reaches lowest levels since 1990

  6. 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

  7. Nova Scotia Business Expectations: SME Overview

  8. 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

  9. NDP and Economy • Appreciate support for balanced budget • Caucus support for SME sector • Focus on working families, like small business families

  10. CFIB’s Focus TAXATION

  11. Source: CFIB, Focus on Atlantic Canada Survey, September 2008, N=305.

  12. Tax is top issue Source: CFIB, Focus on Atlantic Canada Survey, September 2008, N=314.

  13. SME Priorities: Nova Scotia Tax is top issue Source: CFIB, OMO Survey No.62, N=869

  14. Why tax is a top priority Nova 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

  15. 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

  16. Spending: Cross-country comparison

  17. SME tax priorities

  18. 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

  19. The way forward: Upcoming budget • 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

  20. Atlantic Comparison

  21. 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

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