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Budget 2008 E mpowering Entrepreneurs

Budget 2008 E mpowering Entrepreneurs. Canadian Federation of Independent Business January 2008. 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.

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Budget 2008 E mpowering Entrepreneurs

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  1. Budget 2008Empowering Entrepreneurs Canadian Federation of Independent Business January 2008

  2. 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

  3. The Power of Entrepreneurs: About more than business • SMEs employ 2/3 of working Islanders • SMEs create 60% of new jobs in PEI • SMEs responsible for 45% of PEI’s GDP • Source: Statistics Canada Economic Contributions: • 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:

  4. The Power of Entrepreneurs: Who Canadians respect Source: CFIB Small Business, Big Value, 2007

  5. The Power of Entrepreneurs:Who Atlantic Canadians trust to create jobs

  6. Empowering Entrepreneurs: Budget 07/08 What 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

  7. 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

  8. 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%

  9. Empowering Entrepreneurs: Spending restraint? • Government spending increased by 64% in last 10 years • Inflation increased by 27% over that same time

  10. Empowering Entrepreneurs:Fiscal responsibility Member Comments: • “Stop government waste” • “Improve efficiency” • “Reduce government loans to large corporations and companies that are high risk” • “Stop direct competition with private sector”

  11. 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

  12. Basic Personal Exemption by Province, 2007 Source: Federal and Provincial Government websites

  13. Empowering Entrepreneurs:Business Tax Load Comparison of Provincial Business Tax Load (Atlantic Canada, Indexed to National Provincial Average at 100%) Source: Saskatchewan Business Tax Review Committee, Nov. 2005

  14. 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

  15. 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

  16. 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

  17. 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

  18. Empowering Entrepreneurs:Reducing Red Tape • Keys to successful reform: • Measurement • Public Reporting • Targets for reductions • Improve communication & customer service

  19. 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

  20. PST Complexity Lotion- PST Powder- Exempt Oil- Exempt Wash cloths- PST Cloth diapers- Exempt Crib- PST Change Pad- PST Blanket- Exempt Disposable diapers- PST Sheets- Exempt Wipes- PST Bumper Pad- PST Mattress- Exempt

  21. Empowering Entrepreneurs: Budget Recommendations 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

  22. Empowering Entrepreneurs: Budget Recommendations 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

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