Business groups welcome infrastructure plan
Stock options, tax measures are a concern to small firms
Canadian business is embracing the Liberal government’s plan to boost spending on transit, clean technology and affordable housing — saying a stronger economy will lift all boats.
The Liberals have promised to plow an extra $60 billion over the next decade into the economy in a bid to boost growth and create jobs, starting with nearly $10 billion this fiscal year.
After a decade of Conservative budgets that cut taxes but also spending, business says there’s pent-up demand for public investment in projects that ease traffic congestion and encourage tech startups to expand.
“We have big food companies for whom their No. 1 issue is infrastructure. They have people sitting in trucks who can’t get their product to market quickly enough,” said Henrik Brakel, senior vice-president with the Canadian Chamber of Commerce.
What they don’t want to see is handouts to pet projects that provide little economic benefit, things like a municipal swimming pool for the town of Rimouski, Brakel said, citing an example from recent prebudget consultations in Ottawa.
But there’s also some nervousness — especially among small business owners — about employment insurance premiums and measures that could prevent dentists and lawyers from incorporating to reduce their personal tax burden.
Business groups are also worried about the impact of expanding the Canada Pension Plan and introducing carbon taxes. Neither is likely to be in this budget as Ottawa still has to negotiate the details with the provinces.
Here’s a closer look at some of the items on corporate Canada’s wish list: Infrastructure spending Canadian Manufacturers and Exporters supports the plan to boost infrastructure spending.
“I think this is a really important budget for the state of the Canadian economy,” said president and chief executive officer Jay Myers.
The CME’s biggest concern is future plans to introduce what business regards as new taxes, such as carbon-reduction schemes and higher Canada Pension Plan deductions. Stock options The Liberals have pledged to impose a$100,000 annual cap on the amount of stock-option gains that qualify for a 50-per-cent tax deduction, a move technology startups say would hamper their efforts to recruit talent.
“We can’t afford to pay the same salary as an Apple, Google or Black- Berry,” said Stephen Lake, co-founder of Thalmic Labs in Waterloo, Ont., noting it’s already tougher to compete against wages paid in higher U.S. dollars.
Prime Minister Justin Trudeau has signalled the government “is listening” but won’t reveal its hand before budget day. Corporate taxes Small business is worried about a promise to prevent high-income earners from using Canadian Controlled Private Corporation status to reduce their tax burden.
The Canadian Federation of Independent Business (CFIB) says this will hurt doctors, dentists and lawyers, especially if Ottawa copies the Quebec plan. That plan limits the use of lower small business tax rates to companies with at least three employees, unless they’re engaged in manufacturing or processing.
“It’s like taking a sledgehammer to deal with something that needs a scalpel,” said CFIB senior vice-president Corinne Pohlmann. Employment insurance The Liberals promised to reduce EI deductions for employees to $1.65 per $100 of payroll from the current $1.88.
Employers’ contribute 1.4 times that amount. The CFIB is hoping the Liberals will reduce the employers’ contribution or extend a small business tax credit set to expire this year that effectively lowers their rate even further.